HHI Calculator - Concentration Score

The HHI calculator measures market concentration by turning firm market shares into one concentration score. Use it when you are comparing competitors in a product market, screening a proposed merger, checking whether one firm dominates a narrow segment, or translating a market share table into a number that can be discussed with finance, strategy, or legal teams.

• • Market scan: Enter each competitor's share to see whether the market looks fragmented, moderately concentrated, or heavily concentrated.
• • Merger screening: Add the two merging firms' shares to estimate the HHI point increase before deeper antitrust review.
• • Competitive strategy: Compare HHI across regions, channels, or product lines when sales shares are measured the same way.
• • Data quality check: Use the unlisted share output to see whether your share table leaves a meaningful part of the market out.

HHI stands for Herfindahl-Hirschman Index. The score is higher when large firms hold more of the market and lower when share is spread across many similar-sized competitors. It is not a forecast of price, profit, or consumer harm by itself. It is a compact way to describe market structure from market share data.

The calculator works best when the shares describe the same relevant market: the same geography, customer group, product boundary, and time period. If one input is national revenue share and another is a local unit share, the result may look precise while mixing different questions.

Before relying on the score, write down what the share table includes and excludes. For example, a hospital market, a bank deposit market, and a software segment can each require different competitors, geographies, and share measures. The arithmetic is quick; the market definition is usually where the judgment sits.

When concentration is only one part of the competitive question, Cross Price Elasticity Calculator helps test whether customers treat two products as substitutes.

HHI is built from percentage market shares, not decimals. A 30 percent firm contributes 900 HHI points because 30 squared equals 900.

• s1, s2, ... sn: Each firm's market share as a percentage of the relevant market.
• HHI: The sum of all squared percentage shares, usually reported as points from near 0 to 10,000.
• Merger change: For two merging firms with shares a and b, the HHI increase is 2 x a x b because (a + b)^2 replaces a^2 + b^2.

The optional merger inputs do not replace the current share list. They estimate how much HHI would rise if two listed firms combined. For example, combining a 20 percent firm with another 20 percent firm raises HHI by 800 points because 2 x 20 x 20 = 800.

If your share list is incomplete, the calculator still squares the listed shares and reports the omitted share. That is useful for a first pass, but it should not be read as a complete market score until the missing share is explained.

The effective competitors output translates the HHI into an equal-sized-firm equivalent. An HHI of 2,000 has the same concentration as five equal 20 percent competitors, since 10,000 divided by 2,000 equals five.

According to U.S. Department of Justice Antitrust Division, HHI is calculated by squaring each firm's market share and summing the resulting numbers.

After scoring market concentration, Margin Calculator can connect share structure to unit economics for the same product line.

These concepts help keep the score tied to the business question behind the numbers.

Market share quality matters as much as the arithmetic. Shares based on units, revenue, subscribers, capacity, or deposits can each answer a different competitive question. Pick the measure that fits the decision you are making and keep it consistent across firms.

HHI can also change quickly when a market is growing, when capacity is constrained, or when private competitors are hard to measure. Treat the output as a structured starting point for analysis rather than a substitute for market evidence.

If your concentration study uses industry output or national accounts as context, GDP Calculator supports the broader market sizing work.

Start the HHI calculator with a clean market share list, then use the optional merger fields only when you are testing a specific two-firm combination.

1. 1 Define the market: Choose the product, geography, customer segment, and time period before entering shares.
2. 2 Enter firm shares: Type each share as a percentage, separated by commas, spaces, or line breaks.
3. 3 Check coverage: Review the unlisted share output. A large gap means the score may understate or misstate concentration.
4. 4 Read the band: Use the concentration band to separate a low-screening market from one that needs closer review.
5. 5 Test a merger: If two firms may combine, enter their shares in the merger fields and read the HHI change.

Suppose a regional market has competitors at 28%, 24%, 18%, 12%, 10%, and 8%. Enter those six shares to get HHI 2,072. If the 18% and 12% firms merge, the HHI change is 432 points, producing a post-merger HHI of 2,504.

When a merger screen feeds into deal analysis, Business Valuation Calculator helps keep the valuation side separate from the concentration math.

HHI is useful because it turns a competitor table into a score that can be compared across scenarios.

• • Compare market structures: Score separate regions, product lines, or time periods with the same formula.
• • Screen merger scenarios: Estimate whether a proposed combination materially changes the concentration score.
• • Explain concentration clearly: Use one number plus the share list to communicate market structure to non-specialists.
• • Spot data gaps: The unlisted share output shows when your market share table is missing part of the market.
• • Connect strategy to economics: Pair HHI with margin, elasticity, capacity, and customer switching evidence for a fuller view.

The benefit is strongest when you compare like with like. A year-over-year HHI trend for the same market can reveal whether share is consolidating. A cross-market comparison can show why the same acquisition may look different in two geographies.

HHI should sit beside commercial evidence. Margins, switching costs, entry barriers, customer contracts, and product differentiation can all change how much a concentration score matters.

For internal planning, save the share list with the score. That record makes later comparisons more useful because a new HHI can be traced back to specific share changes instead of a vague market narrative. If the share source changes, label that change before comparing old and new scores.

For pricing or channel strategy, Contribution Margin Calculator pairs well with HHI because concentration alone does not show per-unit profit pressure.

Several inputs and assumptions can move the score even when the formula stays simple.

• • The calculator does not decide whether a merger is lawful, harmful, or reportable. It only applies the HHI arithmetic and screening bands.
• • If market shares do not total 100 percent, the HHI omits unknown competitors. The result can understate concentration when a large firm is missing.
• • Static HHI does not measure entry, product quality, buyer power, capacity limits, or coordination evidence.

Current DOJ/FTC guidance treats markets between 1,000 and 1,800 HHI points as moderately concentrated and markets above 1,800 points as highly concentrated. The agencies also discuss HHI changes in merger analysis, including increases over 100 points in highly concentrated markets.

Use those thresholds as a screening frame, then look at the facts behind the market definition and shares. Small changes in market boundary can move a score across a threshold, especially when one or two firms sit near the edge of the defined market.

According to Federal Trade Commission 2023 Merger Guidelines, the 2023 Merger Guidelines were issued by the U.S. Department of Justice and Federal Trade Commission.

If concentration shifts are part of a business case, Profit Calculator can model the earnings side without changing the HHI inputs.