Arti – Definisi – Pengertian Herfindahl-Hirschman Index

A warning signal of possible MONOPOLY. ANTITRUST economists often gauge the COMPETITIVENESS of an industry by measuring the extent to which its OUTPUT is concentrated among a few FIRMS. One such measure is a Herfindahl-Hirschman index. To calculate it, take the market share of each firm in the industry, square it, then add them all up. If there are 100 equal-sized firms (a market with close to PERFECT COMPETITION) the index is 100. If there are four equal-sized firms (possible OLIGOPOLY) it will be 2,500. The higher the Herfindahl number, the more concentrated is MARKET POWER. The main virtue of the Herfindahl is its simplicity. But it has two unfortunate shortcomings. It relies on defining correctly the industry or market for which the degree of competitiveness is open to question. This is rarely simple and can be a matter of fierce debate. Even when the scope of the market is clear, the relation between the Her findahl and market power is not. When there is a CONTESTABLE MARKET, even a firm with a Herfindahl of 10,000 (the classic definition of a monopoly) may behave as if it was in a perfectly competitive market.

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