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    Herfindahl indices

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    Herfindahl Index (HHI) is the sum of the squared market shares of all the firms in the market.

    Company A - 35% market share
    Company B - 34% market share
    Company C- 13% market share
    Company D- 8% market share
    Company E- 4% market share
    Company F- 6% market share

    What is the HHI given the above?

    And how do I use the index?

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    Solution Preview

    Hirschman-Herfindahl Index (HHI). It is the sum of the squared market shares of the competitors. The index ranges from 10,000 for pure monopoly down to below 100 for perfect competition. The HHI in this case in computed by:
    Company Market Share ...

    Solution Summary

    Herfindahl Index (HHI) is applied.