Herfindahl index

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A measure of market concentration.

Higher Herfindahl index numbers mean a greater degree of market concentration.

The index ranges from 0 to 10,000.

It is calculated as the sum of the squared market shares of individual entities in the market, expressed as percentages and then ignoring the percentage signs.

For example, if one entity monopolised the entire market, its market share would be 100%.

The index would be calculated as:

100 x 100 = 10,000

See also