Principles of Microeconomics / Unit 9 MIC 0818 short lesson, about 20 seconds
The Herfindahl-Hirschman Index
Captions available
The idea
The Herfindahl-Hirschman Index squares every firm's percentage share and adds them. A monopoly scores ten thousand; a hundred equal firms score one hundred. Squaring weights the largest firms.
In practice
Five firms at twenty each give two thousand; one at seventy-seven and many at one give far more.
Where people slip
Both measures assume the market is correctly defined, and that is where most disputes live.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Unlocks
Something wrong in this lesson? Flag it