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Definition

(HHI) A formula for calculating market concentration. The index is calculated by adding together the squares of the companies' percentage market shares. The highest reading would be at or close to 10 000 for an industry which was completely controlled by one monopoly. A market with an HHI of 1500 or less is considered to be competitive. From 1500 to 2500 is considered moderately concentrated and anything above 2500 is excessively concentrated. The HHI is used by the US Department of Justice when considering mergers and acquisitions.

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