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Spreadsheet for Calculating Herfindahl-Hirshman Index (HHI)

The problem gives this chart:

Competitor
Rank
Market A Market B Market C Market D
1 40 25 10 50
2 30 25 10 25
3 15 10 8 10
4 10 10 8 10
5 5 6 8 2
6 5 8 2
7 5 8 1
8 5 8
9 5 8
10 4 8
11 8
12 8
Totals 100 100 100 100

Calculate the pre-merger HHI measures for each market. How would a merger affect a market's HHI?

Solution Preview

See the attached file for the calculations.

HHI is a measure of market concentration. You calculate HHI by summing the squares of the market shares. You can express the ...

Solution Summary

This solution explains the Herfindahl-Hirshman Index (HHI) and gives an Excel spreadsheet that can be used to calculate the HHI for any market, both before and after a merger.

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