Herfindahl-Hirschman Index

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Herfindahl-Hirschman Index (HHI) is when you take the market share of each firm in the industry, square each one, and add them.


Definition

According to Principles of Economics by Timothy Taylor (3rd edition),

Herfindahl-Hirschman Index (HHI). Take the market share of each firm in the industry, square each one, and add them.

According to the Strategic Management by Parnell (4th edition),

Herfindahl-Hirschman Index (HHI). A sophisticated measure of market concentration calculated by summing the squares of the market shares for each firm competing in an industry.
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