Full formBusiness & Corporate
HHIstands forHerfindahl-Hirschman Index
Full Form of HHI
What is HHI?
The Herfindahl-Hirschman Index (HHI) is a widely used measure of market concentration and competition within an industry. It is calculated by summing the squares of the market shares of all firms in a market, producing a value ranging from near zero (highly competitive) to 10,000 (pure monopoly). In India, the HHI plays a critical role in competition law enforcement by the Competition Commission of India (CCI). It is applied during merger and acquisition reviews to assess whether a proposed combination would significantly increase concentration and reduce competition. The index helps regulators determine if a market is unconcentrated, moderately concentrated, or highly concentrated under the Competition Act, 2002. For instance, a post-merger HHI above 2,500 with a delta increase of more than 150 often triggers closer scrutiny. The HHI is also used by economists, researchers, and policymakers to analyze market structures across sectors such as banking, telecom, and pharmaceuticals. For students preparing for Indian competitive exams like UPSC, RBI Grade B, or UGC NET Economics, understanding the HHI is essential as questions frequently appear on market concentration indices and their relevance to Indian competition policy. The index provides a quantitative basis for evaluating the trade-off between efficiency gains and anti-competitive effects, making it a fundamental tool in industrial organization and regulatory economics.
HHI का फुल फॉर्म
हरफिंडाल-हिर्शमैन सूचकांक
Example
During the proposed merger of two telecom giants, the Competition Commission of India calculated the post-merger HHI and found it exceeded 3,000, indicating a highly concentrated market that warranted a detailed investigation.
HHI — frequently asked questions
What is the full form of HHI?
HHI stands for Herfindahl-Hirschman Index, a metric used to measure market concentration by summing the squared market shares of all firms in an industry.
How is HHI used by the Competition Commission of India?
The CCI uses HHI to evaluate mergers and acquisitions — a high post-merger HHI (above 2,500) with a significant increase (delta > 150) often signals reduced competition and may require remedies or approval conditions.
What does an HHI value of 1,500 mean in simple terms?
An HHI between 1,000 and 2,500 indicates a moderately concentrated market. A value of 1,500 suggests some concentration but still enough competition, though regulators monitor such markets closely.