Friday, January 17, 2014

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)

No comments:

Post a Comment

Search Thousands of Case Briefs and Articles.