HHI Calculator — Herfindahl-Hirschman Index

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How this is calculated

The Herfindahl-Hirschman Index was independently developed by Orris Herfindahl and Albert Hirschman in the 1940s–50s and is now the standard tool regulators use to screen mergers for anti-competitive effects. It is computed by squaring the market share of each firm — expressed as a plain percentage, not a decimal — and summing those squares across all firms in the market. Squaring amplifies the contribution of large players: a single firm with 50% contributes 2,500 points while ten equal firms at 10% each sum to only 1,000 points.

The US Department of Justice (DOJ) and Federal Trade Commission (FTC) publish three zones for HHI: markets below 1,500 are classified as unconcentrated and are unlikely to attract antitrust scrutiny; 1,500 to 2,500 are moderately concentrated; above 2,500 are highly concentrated. A merger that would raise the HHI by more than 200 points in a highly concentrated market triggers a presumption of competitive harm under the 2023 Merger Guidelines.

The normalised HHI divides the raw index by 10,000 to give a 0–1 scale; a monopoly scores exactly 1. The concentration ratio CR4 is the combined market share of the four largest firms — a simpler but less sensitive indicator of market power. Both metrics are approximate: they assume market shares are measured correctly and that market boundaries are well-defined, which can be contested in practice.