# 041.Herfindahl-Hirschman Index

- Canonical URL: https://www.gerhardmerk.de/041-herfindahl-hirschman-index
- Post ID: 617786
- Modified: 2026-10-29T01:21:02+00:00
- Language: en

## Definition

The Herfindahl-Hirschman Index (HHI) measures the concentration of a market or another distribution of economic activity. It is calculated by summing the squared market shares of all firms, exporters or other relevant units. Squaring gives greater weight to large shares, so the index rises as activity becomes concentrated among fewer participants. When shares are expressed as percentages, the HHI ranges from close to zero to 10,000; when expressed as fractions, it ranges from zero to one. In trade analysis, the index can describe the concentration of a country’s exports across firms, products or destination markets. Competition authorities also use it, among other indicators, when assessing market structure and the possible effects of mergers.

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