Cautionary Note About the Herfindahl-Hirschman Index of Market (Industry) Concentration

IF 2.4 Q2 ECONOMICS

Contemporary Economics Pub Date : 2021-03-31 DOI:10.5709/ce.1897-9254.468

T. O. Kvålseth

引用次数: 2

Abstract

The Herfindahl-Hirschman index (HHI) appears to be the most widely used index of market or industrial concentration. It is a summary measure that indicates the degree of competition, market power, and efficiency within a market or an industry. The HHI is also used by government agencies when evaluating potential violation of antitrust laws and regulations. As emphasized in this paper, and in spite of its several desirable properties, HHI has one serious imitation: it lacks the value-validity property. Lacking this property, caution has to be exercised when using HHI in order to avoid invalid and misleading results and conclusions. A corrected index is developed as a simple reformulation of HHI. Since this new index formulation meets the conditions imposed by the value-validity property to a high degree of approximation, and has other desirable properties comparable to those of HHI, the corrected index can safely be used to make various types of comparisons that are true and valid representations of market (industry) concentration. Numerical data are provided to support and exemplify the use of the corrected index.

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关于赫芬达尔-赫希曼市场(行业)集中度指数的警示

赫芬达尔-赫希曼指数(HHI)似乎是最广泛使用的市场或产业集中度指数。这是一个总结性的衡量标准，表明市场或行业内的竞争程度、市场力量和效率。HHI也被政府机构用来评估可能违反反托拉斯法律法规的行为。正如本文所强调的那样，尽管HHI具有一些令人满意的特性，但它有一个严重的模仿:它缺乏价值有效性。由于缺乏这种特性，在使用HHI时必须谨慎，以避免无效和误导性的结果和结论。修正后的指数是HHI的一个简单公式。由于这个新的指数公式满足价值有效性属性所要求的条件，达到高度近似，并且具有与HHI相媲美的其他理想属性，因此可以安全地使用修正后的指数进行各种类型的比较，这些比较是真实有效地表示市场(行业)集中度。提供了数值数据来支持和举例说明修正指数的使用。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Contemporary Economics ECONOMICS-

CiteScore

3.70

自引率

9.50%

发文量

审稿时长

24 weeks

期刊介绍： The mission of the Contemporary Economics is to publish advanced theoretical and empirical research in economics, finance, accounting and management with the noticeable contribution and impact to the development of those disciplines and preferably with practice relevancies. All entirety of methods is desirable, including a falsification of conventional understanding, theory building through inductive or qualitative research, first empirical testing of a theory, meta-analysis with theoretical implications, constructive replication that clarifies the boundaries or range of a theory for theoretical research as well as qualitative, quantitative, field, laboratory, meta-analytic, and combination for an empirical research. This clear priority for comprehensive manuscripts containing a methodology-based theoretical and empirical research with implications and recommendations for policymaking does not exclude manuscripts entirely focused on theory or methodology. Manuscripts that raise significant, actual topics of international relevance will be highly appreciated. The interdisciplinary approach including – besides economic, financial, accounting or managerial –also other aspects, is welcomed.