The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Herfindahl Index

  • William G. Shepherd
Reference work entry


This is one form within the species of ‘comprehensive’ indices of market structure, and is used in industrial economics to suggest the degree of monopoly power. The Hirschman–Herfindahl Index (HHI) is the sum of the squared values of all firms’ market shares in a given market. If shares are measured from 0 to 1.0, the HHI ranges from minimal to 1. If the shares are taken as per cent values from 0 to 100, then the HHI ranges from minimal to 10,000.

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  1. Hirschman, A.O. 1964. The paternity of an index. American Economic Review 54: 761.Google Scholar
  2. Scherer, F.M. 1970. Industrial market structure and economic performance, 2nd ed. Chicago: Rand-McNally, 1980.Google Scholar

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • William G. Shepherd
    • 1
  1. 1.