Calculate HHI from market shares, review concentration metrics, and estimate post-merger delta HHI under current DOJ screening thresholds.
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Market concentration worksheet
Calculate the Herfindahl-Hirschman Index from market shares, see how concentrated the market looks under the familiar HHI bands,
and optionally model how a two-firm merger changes HHI under the current DOJ structural-presumption screen.
Firm market shares
Enter percentage shares for the firms you want to include. If the total is below 100%, the worksheet treats the remainder as unallocated market share rather than forcing a false full-market assumption.
Row 1. Leave the share blank or zero if this firm should not count in the current market-definition draft.
Row 2. Leave the share blank or zero if this firm should not count in the current market-definition draft.
Row 3. Leave the share blank or zero if this firm should not count in the current market-definition draft.
Row 4. Leave the share blank or zero if this firm should not count in the current market-definition draft.
Optional merger scenario
Select two active firms to estimate post-merger HHI and the HHI delta. This is useful when a market-concentration question is really a merger-screening question.
Enter market shares Add at least one positive market share to see the HHI result.
HHI calculator guide: market concentration, merger delta-HHI, and antitrust screening
An HHI calculator measures how concentrated a market is by squaring each firm's market share and summing the results. This page helps with the real questions behind that math: how concentrated the market already looks, how many firms actually dominate it, and how much a merger could increase concentration under current U.S. antitrust screening thresholds.
What this HHI calculator is measuring
HHI stands for Herfindahl-Hirschman Index. It is a market-concentration measure built by squaring each firm's market share and adding those squared shares together. The index becomes small when many firms each hold a small slice of the market and much larger when a few firms dominate. A monopoly has an HHI of 10,000 because one firm with 100% share produces 100 squared.
That structure makes HHI useful for more than one audience. Strategy and finance teams use it to summarize market structure. Competition economists and legal teams use it as a screening input in merger analysis. Students and analysts use it because it is an intuitive bridge between simple market-share tables and more formal concentration analysis.
This worksheet is deliberately built to serve both the base-market question and the merger question. It calculates the current HHI, shows the top-four concentration ratio and effective number of equal-size firms, and optionally models what happens if two firms combine into one merged share.
How the HHI and merger delta are calculated
The base HHI is the sum of squared percentage shares. If four firms hold 40%, 30%, 20%, and 10%, the HHI is 40 squared plus 30 squared plus 20 squared plus 10 squared. Squaring matters because it weights large firms far more heavily than small ones. A market with one 50% firm and five 10% firms is more concentrated than a market where six firms each hold about 16.67%, even though both totals still sum to 100%.
For a merger screen, the post-merger HHI is calculated by replacing the two merging firms with one firm whose share equals the sum of their shares. The delta HHI is the difference between the post-merger HHI and the pre-merger HHI. Algebraically, if firms with shares a and b merge, the HHI increase is 2ab. That is why a merger between two relatively large firms can move HHI quickly even if the rest of the market stays unchanged.
This page uses the familiar educational bands of below 1,500, 1,500 to 2,500, and above 2,500 for the general concentration label because they remain common in teaching materials and older competition references. It also separately checks the current 2023 U.S. DOJ/FTC structural-presumption screen for mergers, which generally looks for post-merger HHI above 1,800 and an HHI increase above 100.
HHI = s1² + s2² + s3² + ... + sn²
Each firm's percentage share is squared and then summed to measure overall market concentration.
Delta HHI from merger = 2ab
If firms with shares a and b merge, the increase in HHI equals two times the product of their market shares.
Effective equal-size firms = 10,000 / HHI
This converts the HHI into an intuitive approximation of how many equal-size firms would create the same concentration level.
Further reading
DOJ — 2023 Merger Guidelines — Primary DOJ and FTC statement describing how the agencies apply concentration analysis in merger review.
Suppose four firms hold shares of 35%, 25%, 20%, and 20%. The base HHI is 35 squared plus 25 squared plus 20 squared plus 20 squared, which equals 1,225 + 625 + 400 + 400 = 2,650. Under the familiar educational bands, that already screens as a highly concentrated market because it sits above 2,500.
Now suppose the 35% and 25% firms merge. Their combined firm would hold 60% share, leaving a market of 60%, 20%, and 20%. The post-merger HHI becomes 60 squared plus 20 squared plus 20 squared, or 3,600 + 400 + 400 = 4,400. The delta HHI is 1,750, which is the same result you get from the shortcut formula 2 × 35 × 25.
That example shows why HHI is often used as a first screening tool in merger work. The market already looks concentrated before the transaction, and the merger sharply increases concentration further. The worksheet does not decide whether the merger is unlawful. It shows how strongly market-share structure alone can change once two major competitors are treated as one.
What this HHI worksheet does not answer on its own
HHI is a market-structure indicator, not a full competition analysis. The hardest part of real HHI work is usually market definition: deciding which products, geographies, customers, and rivals belong in the same relevant market. If the share inputs are wrong or incomplete, the HHI will still calculate cleanly but may describe the wrong market.
The same caution applies to merger interpretation. A large delta HHI may raise concern, but real antitrust review also considers entry conditions, head-to-head competition, capacity, buyer power, product differentiation, and evidence of actual competitive effects. Use this page to make the arithmetic transparent, not to replace formal economic or legal analysis.
HHI does not have a universal good-or-bad score outside context. Lower values generally describe less concentrated markets, while higher values describe more concentrated ones. In educational materials and older merger references, values below 1,500 are often described as unconcentrated, 1,500 to 2,500 as moderately concentrated, and above 2,500 as highly concentrated. But the meaning still depends on market definition and what decision you are trying to support.
Why does squaring the market shares matter?
Squaring gives larger firms much more weight than smaller firms. A 40% firm contributes 1,600 points to HHI all by itself, while a 10% firm contributes only 100. That is exactly why HHI is useful: it does not just count firms, it reflects how unevenly market power is distributed across them.
Why can the total market shares be less than 100% here?
Sometimes you only know the leading firms or you are drafting a market-share table before every fringe competitor is assigned. This worksheet allows totals below 100% and shows the remainder as unallocated share so you can still see the concentration implied by the firms you do know. That can be useful for screening, but the result should be interpreted as incomplete until the market-share base is fully specified.
Can this calculator decide whether a merger is illegal?
No. It only performs the concentration arithmetic. Real merger review depends on market definition, competitive effects, entry, customer alternatives, legal standards, and fact-specific evidence. The calculator is valuable because it makes the HHI math and the delta-HHI implication explicit, but it is not legal advice or a substitute for antitrust analysis.
