HHI Calculator (Herfindahl-Hirschman Index Calculator)

How to use the HHI calculator

The Herfindahl-Hirschman Index, usually shortened to HHI, summarizes how concentrated a market is. The calculator squares each firm’s market share and adds the squared values. Squaring makes a large firm count more heavily than several small firms with the same combined share. The result is expressed on a 0-to-10,000-point scale when market shares are entered as percentages and the market totals 100%.

Market share fields

Enter one percentage for each firm that competes in the relevant market. The fields accept plain numbers, commas, spaces, and a percent sign. A value of 35 means 35%, not 0.35%. Each positive share is required only for firms you want included; blank and zero rows are ignored. Higher shares increase HHI at an accelerating rate because the calculation uses the square of each share. Negative shares and values above 100% are invalid. A common mistake is mixing revenue values with percentages: first calculate each firm’s sales divided by total market sales, then enter the resulting percentage.

Use Add firm to include up to 15 competitors. Include the entire relevant market whenever possible. If entered shares total less than 100%, the calculator still returns the contribution of the known firms, but the result may understate full-market concentration. If the total exceeds 100%, check whether firms overlap, whether shares come from different years, or whether the market definition is inconsistent.

Optional merger controls

Open the merger section, enable the scenario, and select two different firms. The calculator combines their shares without changing the other firms. It then reports post-merger HHI and the increase in HHI. The exact increase equals twice the product of the two merging shares. This scenario is optional and does not alter the base HHI table. Selectors are unavailable until at least two firms have positive shares.

How the formula works

Here, each s is a firm’s market share in percentage points. For example, shares of 35%, 22%, 20%, 10%, 8%, 3%, and 2% produce an HHI of 2,286. A monopoly has one firm at 100%, so HHI equals 10,000. Ten equally sized firms at 10% each produce an HHI of 1,000. The U.S. Department of Justice HHI overview explains the same sum-of-squares method.

How to interpret every result

HHI points and screening band

The primary result is the raw HHI in points. A lower value generally indicates that market share is distributed among more firms; a higher value indicates that share is concentrated among fewer or larger firms. The live U.S. screening band follows the agencies’ 2023 framework: below 1,000 is not highly concentrated under the structural screen, 1,000 to 1,800 is moderately concentrated, and above 1,800 is highly concentrated. The 2023 Merger Guidelines also state that a merger increasing HHI by more than 100 points in a highly concentrated market can trigger a structural presumption. Older material may show the withdrawn 2010 bands of 1,500 and 2,500, so always identify which framework a source uses.

Total share, decimal HHI, equivalent firms, and CR4

Total entered share checks coverage. A result near 100% is the strongest basis for interpreting the raw HHI as a full-market measure. Decimal HHI divides HHI points by 10,000; an HHI of 2,286 becomes 0.2286. Equivalent equal-sized firms is the entered total squared divided by HHI. It answers: how many equal-sized firms would create a similar degree of concentration within the entered set? A lower number means greater concentration. CR4 adds the four largest entered shares. CR4 is easier to explain but less sensitive than HHI to the distribution among firms below the top four.

Merger outputs

Post-merger HHI is the concentration level after the selected firms are treated as one company. Change in HHI is post-merger HHI minus the base HHI. A zero change appears only when one selected share is zero, which is excluded here. A positive change is mathematically inevitable when two positive firms combine because the cross-product term is added. These screens are analytical starting points, not final legal conclusions. The agencies describe the guidelines as non-binding and apply the law and facts of each case.

How to read the chart and table

The ring shows the relative mix of the positive shares you entered. When more than five firms are active, the four largest are shown separately and the remaining fir ms are combined into an “Other firms” segment. The legend gives each segment’s actual entered share and its percentage of the entered total. If the total is not 100%, the ring is normalized for visualization only; the HHI calculation continues to use the original percentages.

The detail table is the audit trail. “Share squared” is the exact number added to HHI. “Share of HHI” identifies which firms drive concentration most strongly, and “Cumulative share” shows how quickly the entered market builds as firms are read in entry order. Download Excel exports the current inputs, results, chart breakdown, detailed rows, merger scenario, and notes into a real workbook.

Benefits, limitations, and common mistakes

HHI is compact, transparent, and more informative than a simple top-firm ratio because it uses every included firm and weights large shares more heavily. Its main limitation is market definition. The same companies can produce very different shares depending on product scope, geography, customer group, time period, and whether capacity or sales is used. HHI also does not directly measure entry barriers, buyer power, product differentiation, innovation, or likely competitive responses. For U.S. merger review context, consult the Federal Trade Commission’s merger guidance. For cross-border work, the European Commission’s merger-guideline review illustrates that legal frameworks and thresholds can differ.

• Use shares from the same market definition, measurement basis, and period.
• Do not enter sales dollars directly; convert them to percentages first.
• Do not treat a partial-share HHI as a complete market result without qualification.
• Use the merger screen as an analytical indicator, not personalized legal advice.