HHI Calculator (Herfindahl-Hirschman Index Calculator)

Measure market concentration with the Herfindahl-Hirschman Index. Enter each competitor's market share to get the HHI score, the DOJ/FTC concentration category, and the equivalent number of equally sized firms.

Quick Facts

Formula
HHI = sum of (market share)-squared
Shares are entered as percentages (0-100), so the index runs from near 0 up to 10,000 for a pure monopoly.
DOJ/FTC bands
Below 1,500 / 1,500-2,500 / above 2,500
Unconcentrated, moderately concentrated, and highly concentrated, per the 2010 Horizontal Merger Guidelines.

Your Results

Calculated
HHI index
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Sum of squared market shares
Concentration category
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DOJ/FTC classification
Effective number of firms
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10,000 divided by HHI
Total share entered
-
Should be 100% for a full market

Ready

Enter a market share (0-100%) for each firm and press Calculate. Shares should sum to 100% if you have listed the whole market.

How the HHI Calculator works

The Herfindahl-Hirschman Index (HHI) is the standard measure economists and antitrust regulators use to gauge how concentrated a market is among its competitors. It is built entirely from market shares: no revenue figures, prices, or costs are needed, only the percentage of the market each firm holds.

The formula

For a market with firms holding shares s1, s2, ..., sn (each expressed as a percentage from 0 to 100), the index is:

HHI = s1² + s2² + s3² + ... + sn²

Because shares are squared before being summed, the index is much more sensitive to large firms than to small ones. A market split evenly among many tiny competitors produces a low HHI; a market dominated by one or two firms produces a high one. The theoretical range runs from near 0 (an unlimited number of equally tiny competitors) to 10,000 (a single firm with 100 percent of the market).

Worked example

Take five firms with shares of 30%, 25%, 20%, 15%, and 10% — a market that adds up to 100%. The HHI is 30² + 25² + 20² + 15² + 10² = 900 + 625 + 400 + 225 + 100 = 2,250. Dividing 10,000 by that HHI gives an effective number of firms of about 4.4 — meaning this five-firm market behaves, in concentration terms, like a market with roughly four and a half equally sized competitors.

DOJ/FTC concentration bands

The U.S. Department of Justice and Federal Trade Commission's 2010 Horizontal Merger Guidelines classify markets by HHI: below 1,500 is unconcentrated, 1,500 to 2,500 is moderately concentrated, and above 2,500 is highly concentrated. In merger review, regulators also look at how much a proposed merger would raise the HHI — an increase of more than 100 points in an already moderately or highly concentrated market is treated as a signal that warrants closer scrutiny, though the guidelines are only one input into an actual antitrust review.

Data and limitations

  • The result is only as good as the market shares you supply — get them from a consistent, well-defined market (the same product category and geography for every firm entered).
  • If the shares you enter do not add up to 100%, the missing share belongs to competitors you have not listed. The true full-market HHI will be at least as large as the value shown, since adding more nonnegative squared terms cannot decrease the total.
  • HHI measures concentration, not competitive behavior directly — a concentrated market is not automatically anticompetitive, and a fragmented one is not automatically competitive. It is a screening tool, not a legal conclusion.

Frequently Asked Questions

What is the Herfindahl-Hirschman Index (HHI)?
The HHI is a standard measure of market concentration used by antitrust regulators. It is calculated by squaring the market share (as a percentage from 0 to 100) of every competitor in a market and adding the squares together. The index ranges from close to 0, for a market with many equally sized competitors, up to 10,000 for a pure monopoly with a single firm holding 100 percent of the market.
How does the DOJ and FTC classify markets using HHI?
Under the 2010 Horizontal Merger Guidelines used by the U.S. Department of Justice and Federal Trade Commission, a market with an HHI below 1,500 is considered unconcentrated, an HHI from 1,500 to 2,500 is moderately concentrated, and an HHI above 2,500 is highly concentrated. Mergers that push a highly concentrated market's HHI up by more than 200 points typically draw closer regulatory scrutiny.
Why square the market shares instead of just adding them?
Squaring gives disproportionately more weight to larger firms. Ten firms each holding 10 percent of a market produce an HHI of 1,000, while one firm holding 100 percent produces an HHI of 10,000, even though both scenarios total 100 percent of the market. This weighting reflects the intuition that a market dominated by one or two large players is far more concentrated than one split evenly among many small players.
What if I only know the shares of the largest firms?
If the market shares you enter add up to less than 100 percent, the true HHI once every competitor is counted will be at least as high as the value this calculator shows, because adding more nonnegative squared terms can only increase the total. How much higher depends on whether the remaining share is spread across many small firms or concentrated in one more sizable competitor.

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