How To Calculate Herfindahl Index
How To Calculate Herfindahl Index . For instance, if a market consists of four firms that have shares of 25, 25, 40, and 10 percent, the hhi would be as follows: The hhi is calculated by squaring the market share of each firm in the industry and summing the result: Example of HerfindahlHirschman Index YouTube from www.youtube.com (1) divide each player's points scored by the total number of points scored by the team, (2) square that result for each player, (3) sum those squares. Egen h = sum (share2) to calculate the normalized index, you need first to count the number of companies for each industry and year cell: The hhi is used as a measure of competition, with 10,000 meaning perfect.