How to Determine Market Concentration using Hiffendale-Hirschorn Index

Determining Market Concentration

Hiffendale-Hirschorn Index

Square and sum all multiple concentrations:

Mckesson	25%	625
Bergen	22	484
Cardinal	18	324
Amerisource	12	144
Bindley	4	16
Newman	2	4
Morris & Dickson	2	4
Smith	1	1
Others		0

HHI premerger = 1648 (1602 by our rounded calculations)

Guidelines Level for Post-Merger HHI

1000	Essentially a Safe Harbor
1800	Highly concentrated
10,000	Perfect Monopoly

ΔHHI = Twice the product of the two squares

E.g. McKesson & Amerisource = 2 * 12 * 25 = 600

# of firms = 10,000 / HHI (equivalent to firms with equal shares)