HHI Calculator (Herfindahl-Hirschman Index)

The Herfindahl-Hirschman Index is calculated from firm market shares. HHI is a market concentration measure used in antitrust screening, strategy work, industry research, and merger analysis. It squares each firm’s percentage share and adds the squared values. Because large shares become much larger when squared, the index rises sharply when a market is dominated by one or two companies and falls when sales are spread across many competitors.

The scale runs from near 0 to 10,000 when shares are entered as percentages. A monopoly with 100% share has an HHI of 10,000 because 100 squared is 10,000. Ten equal firms with 10% each have an HHI of 1,000 because each contributes 100 points. One hundred equal firms with 1% each have an HHI of 100. The calculator also displays decimal form by dividing the score by 10,000, but the main result uses the familiar antitrust point scale.

How to use the calculator

Enter each firm and its market share as a percentage, not as a decimal. The default example includes seven companies with shares of 35%, 22%, 20%, 10%, 8%, 3%, and 2%. You can rename firms, adjust shares, delete rows, or add firms up to the form limit of 15. The calculation method ignores invalid negative shares but uses every valid nonnegative share in the list.

For a formal HHI, the entered shares should total 100%. The calculator reports the total share entered and changes the tone of that result if the total is not within 0.01 percentage points of 100%. A partial sample can still be a useful screen, but it should not be treated as the market’s final HHI until the relevant market is defined and missing competitors are included.

Formula

The HHI formula is:

$\text{HHI} = s_1^2 + s_2^2 + s_3^2 + \cdots + s_n^2$

Each share is entered in percentage points:

$\text{firm contribution} = \text{market share percentage}^2$

The decimal equivalent shown by the calculator is:

$\text{decimal HHI} = \frac{\text{HHI}}{10000}$

Worked example

Use the default market shares: 35%, 22%, 20%, 10%, 8%, 3%, and 2%. The calculator squares each one. Company A contributes 35 squared, or 1,225 points. Company B contributes 22 squared, or 484 points. Company C contributes 20 squared, or 400 points. The remaining firms contribute 100, 64, 9, and 4 points. Add those contributions and the HHI is 2,286.

The total share entered is exactly 100%, so the market definition passes the calculator’s share-total check. The decimal form is 2,286 divided by 10,000, or 0.2286. Under the DOJ and FTC 2023 Merger Guidelines convention, the classification returned by the calculation method is highly concentrated because the score is above 1,800. If the largest firm instead held 60% and two rivals held 25% and 15%, the HHI would be 3,600 plus 625 plus 225, or 4,450. That would be highly concentrated.

Real applications

HHI is often used at the beginning of a competition analysis. Antitrust agencies may look at whether a merger raises concentration enough to warrant closer review. A business strategist may use HHI to compare industries before entering a new market. An investor may use it as one clue about pricing power, customer choice, or regulatory risk. A procurement team may calculate supplier concentration to understand dependence on a small number of vendors.

The index is not a complete competition model. Market definition matters: a national share can hide local dominance, while a narrow product definition can overstate concentration if buyers have close substitutes. HHI also does not show capacity constraints, switching costs, potential entry, buyer power, patent protection, network effects, or whether firms compete aggressively despite high shares. Use it as a structured screen, then add evidence.

For related calculations, use the percentage calculator to convert raw sales into shares, the business loan calculator when financing affects entry or expansion, and the roi calculator or net present value calculator when a transaction or market-entry decision needs financial modeling. If you are studying inequality among households rather than concentration among firms, compare HHI with the gini coefficient calculator.

Tips and common mistakes

• Enter 35 for a 35% share, not 0.35. The formula expects percentage points.
• Include smaller firms when they are part of the relevant market. Many small competitors can reduce the score materially.
• Keep market definitions consistent when comparing years, regions, or merger scenarios.
• Calculate both pre-merger and post-merger HHI when analyzing consolidation.
• Treat thresholds as screening tools, not automatic legal conclusions.

When building the share list, decide whether revenue, unit sales, capacity, subscribers, deposits, or another measure best reflects competition in the market. Revenue shares may be best when firms sell differentiated products at very different prices. Unit shares may be clearer when products are close substitutes. Capacity shares can matter in commodities or utilities. The HHI formula is simple, but the input definition carries most of the economic judgment.

Sources

Source version: U.S. Department of Justice and Federal Trade Commission, 2023 Merger Guidelines, issued December 18, 2023; DOJ pages accessed July 9, 2026. The calculator maps below 1,000 = unconcentrated, 1,000 through 1,800 = moderately concentrated, and above 1,800 = highly concentrated to that current U.S. federal convention.

• U.S. Department of Justice, Herfindahl-Hirschman Index — exact HHI formula and the current 1,000/1,800 concentration thresholds, expressly mapped there to § 2.1 of the joint 2023 Guidelines.
• U.S. Department of Justice and Federal Trade Commission, 2023 Merger Guidelines — current joint agency framework, issued December 18, 2023; § 2.1 supplies the threshold version used here.