Herfindahl–Hirschman Index

The Herfindahl–Hirschman Index (HHI) is a measurement used to assess the concentration of businesses in a market. It’s calculated by squaring the market shares of each company in the industry and then summing these squares. The result ranges from close to zero (a highly competitive market with many small firms) to 10,000 (a monopoly with one firm). A higher HHI indicates less competition and more market control by a few firms, while a lower HHI suggests a more competitive marketplace, which can benefit consumers through better prices and choices.