Finance tools
HHI calculator — market concentration & Herfindahl-Hirschman Index
Free HHI calculator, Herfindahl-Hirschman Index calculator, and market concentration calculator — not the academic h-index, household income (money), or citation metrics. Enter market shares or revenue per firm, get HHI, CR4/CR8, effective number of firms, optional merger ΔHHI with DOJ/FTC screening bands, and CSV/PDF export.
What is the Herfindahl-Hirschman Index?
The Herfindahl-Hirschman Index (HHI) measures how concentrated a market is by summing the squared market shares of every firm. Higher HHI means fewer dominant players; lower HHI means more fragmented competition. Values run from near 0 (many tiny firms) to 10,000 (monopoly).
U.S. antitrust agencies (DOJ and FTC) use HHI as a screening tool in merger review — not as a final legal verdict. Students, strategists, and investors use it to compare industries or simulate mergers.
Disambiguation: HHI ≠ h-index (citations) and HHI ≠ household income (demographics / money). This page is only for market concentration HHI.
HHI formula and worked example
Formula: HHI = s₁² + s₂² + … + sₙ² where each s is market share in percentage points (35% → use 35, not 0.35). On the standard scale, results range from near 0 to 10,000.
Example: Seven firms with shares 35%, 22%, 20%, 10%, 8%, 3%, 2% → HHI = 35² + 22² + 20² + 10² + 8² + 3² + 2² = 2,286 (moderately concentrated under classic DOJ bands; highly concentrated under 2023 guidelines).
The calculator above loads this example by default and shows each firm’s squared contribution. For a two-firm market at 60% and 40%, HHI = 60² + 40² = 5,200 — a common HHI calculation example in textbooks.
How to interpret HHI concentration bands
Classic DOJ/FTC bands (still common in coursework): unconcentrated < 1,500; moderate 1,500–2,500; highly concentrated > 2,500. A merger that raises HHI by more than 100 points in an already concentrated market may trigger scrutiny.
2023 Merger Guidelines use lower breakpoints: < 1,000 unconcentrated; 1,000–1,800 moderate; > 1,800 highly concentrated. A structural presumption may apply when post-merger HHI exceeds 1,800 and ΔHHI > 100, or when the merged firm’s share exceeds 30% with ΔHHI > 100. Toggle frameworks in the calculator’s advanced panel.
These are screening thresholds, not automatic approvals or blocks. Market definition, entry, efficiencies, and competitive effects matter in real cases. See the DOJ HHI overview and 2023 Merger Guidelines for agency context.
HHI vs CR4 and effective number of firms
CR4 (and CR8) add the market shares of the top four (or eight) firms. They are easy to compute but ignore the distribution among smaller players.
HHI squares shares, so a market with one dominant leader scores higher than a market where four firms are equal — even if CR4 is identical. That is why regulators prefer HHI for merger screening.
The effective number of firms = 10,000 ÷ HHI. It answers: “How many equal-sized firms would produce this HHI?” Example: HHI 2,500 ≈ 4 equal firms at 25% each. This tool reports HHI, CR4, CR8, and effective firms together.
Merger analysis with ΔHHI
When two firms merge, their combined share replaces two squared terms with one larger square — HHI usually rises. Algebraically, merging firms with shares a and b (in percentage points) increases HHI by 2ab.
In the canonical example, merging the 22% and 20% firms lifts HHI from 2,286 to 3,166 (+880 points) — crossing into highly concentrated territory under both classic and 2023 frameworks.
Use Advanced → Merger simulation to pick two firms and see pre/post HHI, ΔHHI, and whether the selected guideline framework flags further screening.
How to calculate HHI in Excel
In Excel or Google Sheets, list each firm’s market share in percentage points (column A), then square each share (column B: =A2^2), and sum column B: =SUM(B2:Bn). The result is HHI on the 0–10,000 scale.
If your shares are decimals (0.35 for 35%), either multiply by 100 before squaring or remember that decimal-scale HHI tops out at 1 (not 10,000). Our calculator detects decimal inputs and converts them automatically.
Prefer no spreadsheet setup? Use the calculator above and export CSV or PDF with inputs, squared-share breakdown, and merger results — an Excel-template alternative without manual formulas.
Using HHI in industry and investment analysis
Investors and strategists use HHI to compare competitive intensity across industries, assess potential pricing power, and flag M&A regulatory risk. A high HHI may signal durable margins — but also higher scrutiny for acquisitions.
HHI alone does not predict profits. Pair it with barriers to entry, switching costs, and margin trends — see our profit margin calculator, price elasticity calculator, and break-even calculator for pricing and unit-economics context.
Limitations of HHI
HHI depends on how you define the relevant market (product scope and geography). It is a snapshot — it does not measure barriers to entry, buyer power, or dynamic competition.
Modeling tip: Enter each firm on its own row. Do not lump smaller rivals into a single “Other” bucket — grouping can overstate concentration because squaring rewards large combined shares.
Do not treat calculator output as legal or investment advice. Thresholds and agency practice evolve; confirm current guidelines for compliance decisions.
How to use this calculator
Enter market shares or revenue
Add each competing firm and its market share (percent) or revenue/volume. Shares should sum to 100%, or enable auto-normalize in Advanced.
Square each share and sum
HHI equals the sum of squared market shares in percentage points: HHI = s₁² + s₂² + … + sₙ². The formula card shows each firm's contribution.
Read concentration and optional merger impact
Compare HHI to DOJ/FTC screening bands, review CR4/CR8 and effective firms, and use Advanced → Merger simulation to see ΔHHI between two firms.
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Frequently asked questions about this HHI calculator
How do you calculate the Herfindahl-Hirschman Index?
Square each firm’s market share in percentage points and add them: HHI = Σ (share %)². Example: two firms at 60% and 40% → 60² + 40² = 3,600 + 1,600 = 5,200.
What is a good HHI score?
There is no universal “good” score — context matters. Under classic DOJ bands, HHI below 1,500 is unconcentrated; 1,500–2,500 moderate; above 2,500 highly concentrated. The 2023 guidelines use lower breakpoints (see advanced toggle).
What is considered a high HHI?
Under classic U.S. screening, HHI above 2,500 is highly concentrated. Under the 2023 Merger Guidelines, HHI above 1,800 is highly concentrated. A “high” HHI signals few dominant firms — not automatically illegal conduct.
What does an HHI of 10,000 mean?
An HHI of 10,000 means a pure monopoly: one firm holds 100% share (100² = 10,000). That is the maximum on the standard 0–10,000 scale.
Can the Herfindahl-Hirschman Index be greater than 1?
Yes on the standard antitrust scale — HHI ranges from 0 to 10,000 when shares are entered as percentage points (35% → 35). If you use decimal shares (0.35), HHI tops out at 1. This calculator uses the 0–10,000 scale and auto-detects decimal inputs.
What is the difference between CR4 and HHI?
CR4 sums the top four shares. HHI sums squared shares of all firms, weighting large players more. Two markets with the same CR4 can have different HHI if share distribution differs.
Why are market shares squared in the HHI formula?
Squaring gives more weight to large firms and makes HHI sensitive to inequality. A merger of firms with shares a and b increases HHI by 2ab points.
What HHI level triggers antitrust scrutiny on a merger?
Screening rules vary by guideline version. Classic screen: post-merger HHI above 2,500 with ΔHHI > 100. The 2023 guidelines use 1,800 and Δ > 100, plus a separate screen when merged share exceeds 30% with Δ > 100. These are starting points, not automatic outcomes.
How do you calculate HHI in Excel?
List each firm’s share in % points, square each cell (=A2^2), and sum the squares. Or use Revenue / volume mode here and export CSV/PDF instead of building a spreadsheet from scratch.
Does high market concentration always mean higher prices?
No. HHI measures market structure, not pricing outcomes. Concentrated markets can stay competitive if entry is easy, demand is elastic, or firms compete aggressively. Low HHI can still mean tough rivalry.
Is this the same as the h-index?
No. The h-index measures researcher citation impact. The Herfindahl-Hirschman Index measures market concentration. This calculator is only for the latter.
Is HHI the same as household income?
No. In demographics and surveys, “HHI” sometimes means household income. This tool calculates the Herfindahl-Hirschman Index for market concentration — not personal or family income.
Can I use revenue instead of market share?
Yes — switch to Revenue / volume mode. Enter sales or units per firm; the calculator normalizes to shares and computes HHI. Use one firm per row and a consistent market definition.