Herfindahl index concentration ratio
The Herfindahl-Hirschman Index (HHI) is a slightly more advanced measure of market concentration than the four-firm concentration ratio. It is calculated taking the market share of each firm in the market, squaring each one and adding up the sum. The total ranges from zero, meaning perfect competition, to 10,000, indicating a monopoly. The Herfindahl index provides a more complete picture of industry concentration than does the concentration ratio. Concentration ratios in United Kingdom. UK industries with the highest five-firm concentration ratios (CR 5) include the following: Sugar: 99%; Tobacco products: 99%; Gas distribution: 82%; Oils and fats: 88%; Confectionery: 81% The Herfindahl-Hirschman Index (HHI) is a common measure of market concentration that is used to determine market competitiveness. The concentration ratio, in economics, is a ratio that indicates the size of firms in relation to their industry as a whole. The Herfindahl Index is another measure of industry concentration and it is the sum of the squared percentage of market shares of all firms in the industry. Generally speaking, the lower the Herfindahl, the lower the industry concentration. Concentration Ratios. The following data are from the Economic Census. All of these reports classify industries by the percent of output accounted for by the largest 4, 8, 20 and 50 companies. Only the manufacturing reports include the Herfindahl-Hirschman Index. The measure was introduced by Albert Hirschman and Orris Herfindahl, although it is sometimes referred to simply as the Herfindahl index or H index. Another example of measure that capture market concentration is the N-firm concentration ratio.
3 Sep 2013 Only the manufacturing reports include the Herfindahl-Hirschman Index. Data for 2007, 2002 and 1997 are organized and classified by the
different banks that comprise on the banking sector. Key Words: Bank Concentration, Concentration ratios, HHI index, Market Structure. JEL Classification: A20 Individual concentration ratios (with the exception of. CR.. ) cannot, however, be aggregated in this way. Similarly, in the case of the simple Herfindahl index and Keywords: Credit risk, Concentration risk, HHI index Data adequacy. Concentration Ratio (CR) defined as the aggregate share of the k-largest credits on the. The Herfindahl-Hirschman Index (HHI) is calculated for the 50 largest companies (manufacturing industries only). More information is available on the
20 Jul 2014 Vietnamese banking sector is found to be high-concentration although it is Vietnamese banking sector via CR4; CR6 and HHI – index ratio.
Alternatively, if whole percentages are used, the index ranges from 0 to 10,000 "points". For example, an index of.25 is the same as 2,500 points. The major benefit of the Herfindahl index in relationship to such measures as the concentration ratio is that it gives more weight to larger firms. the Herfindahl index provides a better measure of concentration as it captures both the number of firms and the dispersion of the market shares. Hence the squared market shares. For your information, there is another concentration measure called the Lerner Index, although the Lerner index is a snapshot of the intensity of competition. While the two most widely used measures of market (industrial) concentration, the m-firm concentration ratio C R m and the Herfindahl-Hirschman index H, have no precise functional relationship, they can be related by means of boundary formulations.Such bounds and potential relationships, which have been considered in some earlier reported studies, are being re-examined, corrected, and Concentration Ratios. The following data are from the Economic Census. All of these reports classify industries by the percent of output accounted for by the largest 4, 8, 20 and 50 companies. Only the manufacturing reports include the Herfindahl-Hirschman Index.
Relationship between concentration ratio and Herfindahl-Hirschman index: A re- examination based on majorization theory. (PMCID:pmc6190613 PMCID:
While the two most widely used measures of market (industrial) concentration, the m-firm concentration ratio C R m and the Herfindahl-Hirschman index H, have no precise functional relationship, they can be related by means of boundary formulations.Such bounds and potential relationships, which have been considered in some earlier reported studies, are being re-examined, corrected, and Concentration Ratios. The following data are from the Economic Census. All of these reports classify industries by the percent of output accounted for by the largest 4, 8, 20 and 50 companies. Only the manufacturing reports include the Herfindahl-Hirschman Index. The Herfindahl-Hirschman Index (HHI) is a slightly more advanced measure of market concentration than the four-firm concentration ratio. It is calculated taking the market share of each firm in the market, squaring each one and adding up the sum. The total ranges from zero, meaning perfect competition, to 10,000, indicating a monopoly. The Herfindahl index provides a more complete picture of industry concentration than does the concentration ratio. Concentration ratios in United Kingdom. UK industries with the highest five-firm concentration ratios (CR 5) include the following: Sugar: 99%; Tobacco products: 99%; Gas distribution: 82%; Oils and fats: 88%; Confectionery: 81% The Herfindahl-Hirschman Index (HHI) is a common measure of market concentration that is used to determine market competitiveness. The concentration ratio, in economics, is a ratio that indicates the size of firms in relation to their industry as a whole. The Herfindahl Index is another measure of industry concentration and it is the sum of the squared percentage of market shares of all firms in the industry. Generally speaking, the lower the Herfindahl, the lower the industry concentration.
For the purpose of measuring credit portfolio or market Concentration Risk (e.g., name, sector or geographic risk), diversity or inequality metrics, the Herfindahl-Hirschman Index (HHI) is defined as the sum of all squared relative portfolio shares of the exposures.
While the two most widely used measures of market (industrial) concentration, the m-firm concentration ratio C R m and the Herfindahl-Hirschman index H, have no precise functional relationship, they can be related by means of boundary formulations.Such bounds and potential relationships, which have been considered in some earlier reported studies, are being re-examined, corrected, and
Weinstock , Using the Herfindahl Index to Measure Concentration, 27 Antitrust Bull. 285 (1982). Google Scholar Thus, the 4-firm concentration ratio in this example would be 80% and the 8-firm concentration ration would be 84%. But this concentration ratio approach has an obvious problem. An industry where the four top firms each had 20% of the market would have the same 4-firm concentration ratio of 80% as the example above.