On the concept of market concentration, the minimum Herfindahl‒Hirschman index, and its practical application | Zendy

Algirdas Krivka | Zendy

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On the concept of market concentration, the minimum Herfindahl‒Hirschman index, and its practical application

Author(s) -

Algirdas Krivka

Publication year - 2016

Publication title -

panoeconomicus

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.289

H-Index - 14

eISSN - 2217-2386

pISSN - 1452-595X

DOI - 10.2298/pan140407025k

Subject(s) - market concentration , index (typography) , context (archaeology) , econometrics , value (mathematics) , market share , point (geometry) , economics , market structure , industrial organization , mathematics , computer science , statistics , paleontology , geometry , finance , biology , world wide web

The paper analyses the phenomenon of market concentration in the context of the most popular industrial organization approaches: the structure- conduct-performance (SCP) approach and the efficiency hypothesis (EH). The theory of market concentration evaluation is briefly presented, followed by an analysis of the main concentration indicators and their application in recent empirical research. The main problem in the practical application of the Herfindahl-Hirschman index (HHI) - the necessity to incorporate the market shares of all the enterprises in the market - is further addressed and the issue of calculating the minimum value of the HHI is analysed from the theoretical point of view and by modelling hypothetical markets

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