Herfindahl-Hirschman Index (HHI)
Calculate the HHI market concentration index from firm market shares. Used by antitrust regulators to assess monopoly risk and competition levels.
Results
What is it?
The Herfindahl-Hirschman Index (HHI) = Σ(market share %)² for all firms in a market. Maximum HHI = 10,000 (pure monopoly — 100² = 10,000). US DOJ & FTC thresholds: HHI < 1,500 = unconcentrated (competitive); 1,500–2,500 = moderately concentrated; > 2,500 = highly concentrated (mergers likely challenged).
How to use
Enter the market share of each firm in the market as a percentage. Enter 0 for unused firm slots. The total should sum to 100% (or close). The CR3 indicator shows the combined share of the top 3 firms.
Example scenario
Four firms with 35%, 25%, 20%, 15%, 5%. HHI = 35²+25²+20²+15²+5² = 1225+625+400+225+25 = 2500. This falls at the boundary between moderately and highly concentrated — a merger between the top two firms would be subject to close regulatory scrutiny.
Pro tip
Post-merger HHI is calculated using the combined entity's market share. DOJ typically challenges mergers that increase HHI by more than 200 points in highly concentrated markets, or by more than 100 points in moderately concentrated markets. Export markets and import competition can be argued to lower effective concentration.