to calculate the market concentration is the Herfindahl-Hirschman Index (HHI). the market based on geography, demographics as well as income levels etc. 30 Jul 2018 When looking at market concentration levels across the United using the Herfindahl-Hirschman Index (HHI), which has a range from 0 to Herfindahl-Hirschman concentration index (HHI), defined as the national press, one can calculate a HHI index of 1206.3, And then a constant level. 0. 5. 10. The most used structural indicators to quantify the level of competition and banking systems concentration are Herfindahl-Hirschman Index (HHI) and the cannot be used since it does not depend on the cooperation level. We also measure is the Herfindahl-Hirschman Index, HHI, especially when examining hor -.
The Herfindahl-Hirschman Index (HHI) is a tool used by regulators to determine the level of competition in a specific market. In smaller markets, this tool can also hamper the ability of community banks to merge with a crosstown rival, according to a recent article in the Regional Economist. Furthermore, the Justice Department uses the Herfindahl Index to decide whether a merger is good for competition in the marketplace. A market with an HHI under 1,000 is considered competitive. The Justice Department is likely to scrutinize a merger in an industry with a post-merger HHI of between 1,000 and 1,800, and it is almost certain to
Market share and HHI indices in the Guidelines Market shares and the overall level of concentration in a market normally give useful first information about the competitive situation in a market. The Guidelines therefore indicate, in Section III of the Guidelines, specific market share and concentration levels to specify in which situations the Commission is likely or not likely to have competition concerns.
The formula to calculate Herfindahl-Hirschman Index is as follows: Where: S1, S2, etc… – refers to the percentage market share that various companies hold in the given industry Herfindahl-Hirschman Index Scale. The Herfindahl-Hirschman Index ranges from 1 (least concentrated) to 10,000 (most concentrated). There is also a normalized Herfindahl index. Whereas the Herfindahl index ranges from 1/N to one, the normalized Herfindahl index ranges from 0 to 1. It is computed as: ∗ = (− /) − / for N > 1 and ∗ = for N = 1. where again, N is the number of firms in the market, and H is the The HHI is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers. For example, for a market consisting of four firms with shares of 30, 30, 20, and 20 percent, the HHI is 2,600 (30 2 + 30 2 + 20 2 + 20 2 = 2,600). The HHI takes into account the relative size distribution of the firms in a market. HHI Index can range from 0 to 10,000 if whole percentage numbers are used. Similarly, it can range from 0 to 1, where market shares are used as fractions. E.g. if there’s only one firm operating in an industry, holding 100% market share, it’s respective HHI would be exactly 10,000 or 1 and would indicate a monopoly.
The Herfindahl Hirschman Index (HHI) is a measurement used to understand the level of competition that exists within a market or industry, as well as give an 31 Jul 2018 The term “HHI” means the Herfindahl–Hirschman Index, a commonly accepted measure of market concentration. The HHI is calculated by 6 Jun 2019 The Herfindahl Index, also known as the Herfindahl-Hirschman Index (HHI), measures the market concentration of an industry's 50 largest firms