Each of the four firms in an industry has a market share of 25 per cent. The Herfindahl-Hirschman Index equals

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The Herfindahl-Hirschman Index (HHI) is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers. For four firms each with a 25% market share, the calculation is: $HHI = 25^2 + 25^2 + 25^2 + 25^2 = 625 + 625 + 625 + 625 = 2,500.$

Each of the Four Firms in an Industry Has a Market