what is the herfindahl hirschman index hhi 
the herfindahl hirschman index hhi is a common measure of market concentration and is used to determine market competitiveness often pre and post merger and acquisition m a transactions the index measures the size of companies relative to the size of the industry they are in and the amount of competitiveness the hhi is calculated by squaring the market share of each firm competing in a market and then summing the resulting numbers it can range from close to zero to 10 000 with lower values indicating a less concentrated market investopedia crea taylorformula and calculation of the herfindahl hirschman index hhi the hhi is a commonly accepted measure of market concentration it is calculated by squaring the market share of each firm competing in a market and then summing the resulting numbers it can range from close to zero to 10 000 the u s department of justice uses the hhi for evaluating potential merger antitrust issues 1h h i s 1 2 s 2 2 s 3 2 s n 2 where s n the market share percentage of firm n expressed as a whole number not a decimal begin aligned hhi s 2 1 s 2 2 s 2 3 dots s 2 n textbf where s n text the market share percentage of firm n qquad text expressed as a whole number not a decimal end aligned hhi s12 s22 s32 sn2 where sn the market share percentage of firm n expressed as a whole number not a decimal 