Herfindahl Index Calculator

The Herfindahl Index Calculator (also known as the Herfindahl-Hirschman Index or HHI) is a precise, free online tool used by economists, competition authorities, researchers, and business analysts to measure market concentration and assess the level of competition in an industry. Developed by Orris C. Herfindahl and Albert O. Hirschman, the HHI is the standard metric adopted by antitrust agencies worldwide (e.g., U.S. DOJ, FTC, European Commission) for evaluating mergers and market power. This calculator implements the authentic formula with high accuracy.

About the Herfindahl Index Calculator

The Herfindahl Index Calculator uses the official definition: HHI = Σ (s_i²), where s_i is the market share of firm i (in percentage points). The index ranges from near 0 (highly competitive, many tiny firms) to 10,000 (pure monopoly). This squared-sum approach gives greater weight to larger firms, making it superior to simple concentration ratios.

The U.S. Department of Justice uses HHI thresholds: < 1500 (unconcentrated), 1500–2500 (moderately concentrated), > 2500 (highly concentrated). Post-merger increases > 200 points in highly concentrated markets raise antitrust concerns.

Importance of the Herfindahl-Hirschman Index

The HHI is the gold standard for measuring market concentration in antitrust analysis, industrial organization, and economic policy. It reflects both the number of firms and the inequality of their sizes, providing a comprehensive view of competitive structure.

Regulatory bodies rely on HHI to approve or challenge mergers. A high HHI indicates potential market power, higher prices, and reduced consumer welfare. Low HHI suggests vigorous competition and innovation.

Beyond antitrust, HHI is applied in banking, telecommunications, agriculture (seed/herbicide markets), healthcare, and media industries.

When and Why You Should Use This Tool

Use the Herfindahl Index Calculator when you need to:

• Assess competition level in any market or industry
• Evaluate the impact of proposed mergers or acquisitions
• Analyze concentration in agricultural input markets (seeds, pesticides, machinery)
• Study market structure changes over time
• Support academic research, policy reports, or business strategy
• Compare concentration across sectors or countries

It provides an objective, standardized measure recognized globally by competition authorities.

User Guidelines and How to Use the Calculator

1. Collect market share data (preferably in percentages; absolute values are automatically normalized).
2. Enter values separated by commas, spaces, or one per line.
3. Click "Calculate HHI".
4. View the HHI value, number of firms, and regulatory interpretation.
5. For percentages, ensure they sum approximately to 100 (small discrepancies tolerated).

The tool handles both percentage and absolute inputs accurately.

Purpose of the Herfindahl Index Calculator

This tool makes professional-grade market concentration analysis accessible to everyone—from students and journalists to policymakers and farmers. Understanding market power is crucial for fair competition, consumer protection, and sustainable economic development.

In agriculture, rising HHI in seed and agrochemical markets has raised concerns about innovation, pricing, and farmer choice.

Learn more on Wikipedia's Herfindahl–Hirschman Index page.

Limitations: HHI assumes well-defined markets; geographic and product boundaries matter. It does not directly measure welfare or pricing power.

Normalized HHI (0 to 1 scale) is sometimes used in research, but this calculator provides the standard antitrust version (up to 10,000).

For agriculture and market analysis resources, visit Agri Care Hub.

The HHI's mathematical foundation ensures robust, comparable results across industries and jurisdictions.

Its continued dominance in competition policy underscores its reliability and relevance.

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