• A measure of the degree to which production in a market is either concentrated or dispersed.

• A market in which production is divided among several producers is considered to be less concentrated than one in which all production is in the hands of just one producer.

• The Herfindahl-Hirschman index is used by anti-trust agencies which possess the mandate to promote competition.

• It is calculated by squaring the market share of each producer in the market and then comparing the sum to a scale.

• Critics of the idea say that the lack of legal barriers to entry is a better measure to gauge competition in any market.

Source:TH