HHI Calculator 2026
Herfindahl-Hirschman Index Calculator for Market Concentration
Based on DOJ/FTC guidelines
What is HHI? The Herfindahl-Hirschman Index
๐ HHI Definition
The Herfindahl-Hirschman Index (HHI) is a measure of market concentration used by economists, regulators, and antitrust authorities to assess the competitiveness of an industry. It is calculated by squaring the market share of each firm in the market and summing the results.
The HHI ranges from near 0 (perfect competition with many small firms) to 10,000 (pure monopoly where one firm has 100% market share). The U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC) use HHI to evaluate mergers and market concentration.
HHI Calculator
Enter Market Shares for Each Firm
Enter the market share (%) for each company in the market. Add or remove firms as needed.
๐ Quick Examples
๐ Firm Contribution Breakdown
The HHI Formula: How to Calculate Herfindahl-Hirschman Index
Where si is the market share of firm i (as a percentage) and n is the number of firms in the market.
Alternative Form
Number of Equivalent Firms
- Identify All Firms: List every company competing in the market.
- Calculate Market Shares: Determine each firm's percentage of total market sales/revenue.
- Square Each Share: Square each market share percentage (e.g., 25ยฒ = 625).
- Sum the Squares: Add all squared values together to get the HHI.
- Interpret the Result: Compare to DOJ/FTC thresholds for market concentration.
DOJ/FTC Market Concentration Thresholds
| HHI Range | Market Classification | Regulatory Concern |
|---|---|---|
| 0 - 1,500 | Unconcentrated (Competitive) | Low concern - mergers typically approved |
| 1,500 - 2,500 | Moderately Concentrated | Moderate concern - mergers reviewed |
| 2,500 - 10,000 | Highly Concentrated | High concern - mergers often challenged |
Merger Analysis: Change in HHI (ฮHHI)
๐ Merger Impact Assessment
When two firms merge, the change in HHI equals 2 ร sโ ร sโ (where sโ and sโ are the merging firms' market shares).
| Post-Merger HHI | ฮHHI | DOJ/FTC Action |
|---|---|---|
| Below 1,500 | Any | Unlikely to be challenged |
| 1,500 - 2,500 | < 100 | Unlikely to raise concerns |
| 1,500 - 2,500 | > 100 | May warrant scrutiny |
| Above 2,500 | < 100 | Unlikely to raise concerns |
| Above 2,500 | 100 - 200 | Likely to raise concerns |
| Above 2,500 | > 200 | Presumed to enhance market power |
ฮHHI Formula (Merger Impact)
HHI Examples by Industry
| Industry Example | Typical HHI | Concentration Level |
|---|---|---|
| Operating Systems (Desktop) | ~6,000-7,000 | Highly Concentrated |
| Commercial Aircraft | ~5,000 | Highly Concentrated |
| Credit Cards | ~2,500-3,000 | Highly Concentrated |
| Wireless Carriers | ~2,500-3,000 | Highly/Moderately |
| Airlines (US) | ~1,500-2,000 | Moderately Concentrated |
| Grocery Stores | ~500-1,000 | Unconcentrated |
| Restaurants | ~100-500 | Unconcentrated |
Official Resources
Frequently Asked Questions
Lower is generally more competitive. HHI below 1,500 indicates an unconcentrated (competitive) market. Between 1,500-2,500 is moderately concentrated. Above 2,500 is highly concentrated. "Good" depends on context - regulators prefer lower HHI.
Square each firm's market share percentage and sum them all. For example, if three firms have 40%, 35%, and 25% market shares: HHI = 40ยฒ + 35ยฒ + 25ยฒ = 1,600 + 1,225 + 625 = 3,450.
The maximum HHI is 10,000, which occurs when one firm has 100% market share (monopoly). The calculation: 100ยฒ = 10,000.
The DOJ/FTC use HHI to evaluate if mergers reduce competition. If a merger increases HHI by more than 100 points in a moderately concentrated market, or 200 points in a highly concentrated market, it may be challenged.
Squaring emphasizes larger firms. A firm with 40% share contributes 1,600 to HHI, while a firm with 10% contributes only 100. This reflects that larger firms have disproportionately more market power than small firms.
CR4 (Concentration Ratio) is simply the sum of the top 4 firms' market shares. HHI accounts for ALL firms and squares shares. HHI is considered more accurate as it captures the full market structure, not just top firms.
It equals 10,000 รท HHI. It represents how many equal-sized firms would produce the same HHI. An HHI of 2,000 is equivalent to 5 equal-sized firms (10,000 รท 2,000 = 5).
Economists Orris Herfindahl and Albert Hirschman independently developed similar indices in the 1940s-1950s. Hirschman published first (1945), but Herfindahl's 1950 paper popularized it in the U.S. Both names are credited.
Yes, HHI is used globally. The European Commission, OECD, and competition authorities worldwide use HHI or similar indices for antitrust analysis. Thresholds may differ slightly by jurisdiction.
HHI doesn't capture: barriers to entry, product differentiation, geographic submarkets, potential competition, or dynamic effects. A low HHI doesn't guarantee competition if there are other barriers. It's one tool among many in antitrust analysis.
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Last Updated: January 2026