Herfindahl index


Also found in: Wikipedia.

Herfindahl-Hirschman Index

An index of market concentration the U.S. Department of Justice uses to determine whether a monopoly is forming. The scale goes from zero to 10,000, with 10,000 indicating that a single company controls 100% of the market share in a given industry. An HHI of less than 1000 indicates a market with little concentration, which the Justice Department prefers. Any merger or acquisition leading to an increase of more than 100 when the HHI was previously greater than 1,800 may lead to antitrust action against the company involved.
Herfindahl indexclick for a larger image
Fig. 83 Herfindahl index. The Herfindahl index (H) is the sum of the squared firm sizes, all measured as a proportion of total market size. In the figure, for market A, H = (0.12)2 X 5 + (0.08)2X 5 = 0.104. If all firms in the market are the same size, then the value of the index is equal to the reciprocal of the number of firms; thus, if there are 10 firms all of the same size, H = 0.1. The upper limit of the index is 1, which occurs when there is a monopoly. The figure shows that market B (H = 0.190), with a single dominant firm, is almost twice as concentrated as market A, despite the latter having fewer firms.

Herfindahl index

a measure of the degree of SELLER CONCENTRATION in a MARKET that takes into account the total number of firms in the market and their relative size distribution (share of total market output). See CONCENTRATION MARKET.
Mentioned in ?
References in periodicals archive ?
The report further includes a discussion of the key vendors operating in this market and uses the Herfindahl Index to map the intensity of competition in various markets across the world.
It also characterizes the competition in various geographies using Herfindahl Index.
In the second workshop (in Philippines as APEC host economy of SOM, on August, 2015), experts in economic regulation will share their knowledge and experiences in the use of methods like Cost-Benefit Analysis; and Methodologies like Compensating variation, Herfindahl index, among others.
Herfindahl index gives a weight depending on the exposure to the counterparties.
P/C insurers' insolvency propensity was significantly related to changes in interest rates, industry-wide combined ratio, and the industry-wide Herfindahl index of premiums written.
k] is a vector characterizing the prizes in race k and will include variables such as the total value of all prizes offered and the Herfindahl index of the value of the prizes offered, [r.
gov, with the exception of the Herfindahl index for brewing, which is from William James Adams, Markets: Beer in Germany and the United States, 20 J.
Table 3: Relationship between Insurance Competition and Spending, Utilization, and Price Spending (Input Price Adjusted) Utilization Insurance Herfindahl Index -803.
The extent of diversification can be measured using various index found in the literature like Herfindahl Index (HI), Entropy Index (EI) etc.
ijt] includes other control variables: a dummy variable for the city in which the firm is located, size, age and capital intensity of the firm, whether or not the firm is ISO certified, whether or not the firm is multinational and, lastly, the Herfindahl index of the industry at the six-digit level.
To control for the intensity of product market competition, we have included the Herfindahl index (HHI) as an independent variable, similarly to Kale et al.
Rival firms are grouped by industry concentration deciles based on the Herfindahl Index.