Herfindahl-Hirschman Index Calculator

Problem → model → reason → result

What problem does this model solve?

Calculate HHI by summing the squared market shares of up to five firms.

Why does the model apply?

HHI ranges from near zero for highly fragmented markets to 10,000 for a monopoly. Enter the firms being analysed; omitted smaller firms make the result a lower-bound estimate.

What assumptions does it make?

The variables must describe the same market, firm, period or decision context and use consistent units. Any behavioural condition implied by the formula—such as other factors remaining unchanged—must be reasonable for the question being asked.

Formula

HHI = share₁² + share₂² + … + shareₙ², with percentage shares entered from 0 to 100

Calculation and working

The calculator substitutes your inputs locally and displays the numerical result. Change one input at a time to test which relationship drives the result.

What does the result mean?

Interpret the result in the economic context named above, including its sign, magnitude, units and time period. A calculated relationship is not by itself evidence that one variable caused another.

Worked example

Shares of 35%, 25%, 20%, 12% and 8% sum to 100% and produce an HHI of 2,458.

When does this model not apply?

Do not use the result when the input definitions, units or formula assumptions do not match the real situation. This is an educational model, not financial, investment, tax or policy advice; verify material decisions against primary data and professional guidance.