The Herfindahl-Hirschman Index: A Concentration Measure Taking the Consumer's Point of View Economics 40 Antitrust Bulletin 1995

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40 Antitrust Bull. 423 (1995)
The Herfindahl-Hirschman Index: A Concentration Measure Taking the Consumer's Point of View

handle is hein.journals/antibull40 and id is 435 raw text is: The Antitrust Bulletin/Summer 1995

The Herfindahl-Hirschman index:
a concentration measure taking
the consumer's point of view
BY CHARLES R. LAINE*
Despite numerous articles concerning the Herfindahl-Hirschman
index (HHI) in this and other journals, there still appears to be a
need for a good intuitive explanation of what the index represents.
Providing such an explanation is the purpose of this brief article.
The Justice Department's 1982 adoption of the 1HI as the means
of measuring market concentration for purposes of antitrust analy-
sis has resulted in a number of articles being written about the
index.1 These articles have been both theoretical and empirical, as
well as including some designed to explain the use of the index to
practitioners. Among the articles intended to explain the HHil are
articles such as Miller's The Herfindahl-Hirschman Index as a
Market Structure Variable: An Exposition for Antitrust Practition-
* Professor of Business Administration, Whittier College, Whittier,
California.
AUTHOR'S NOTE: I appreciate helpful comments by Fiona Chan, Stephen
Overturf Kim Thomas, Gregory Woirol, and two anonymous referees of
this journal.
SA bibliography of the main contributions to understanding the
HHI and its use appears at the end of this article.
� 1995 by Federal Legal Publications, Inc.

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