hhi {hhi} | R Documentation |
Calculates the Herfindahl-Hirschman Index
Description
Computes the Herfindahl-Hirschman Index of a market/space, which is a measure of concentration, based on the share size of all individual firms/actors
Usage
hhi(x, "s")
Arguments
x |
Name of the data frame |
s |
Name of the vector (variable) from the data frame, x, corresponding with stored market share values |
Details
Allows for placing the objects directly from working datasets (including, data frame and the market share variable name in quotes) into the function for intuitive usage.
Value
hhi A measure of market concentration
Note
The vector of "share" values should be comprised of integers corresponding to total share of individual firms/actors (e.g., df$s <- c(35, 40, 5, 10, 6, 4) # 6 firms totaling 100 percent of the market). The measure is often used as a measure of competition, where 0 is perfect competitiveness and 10,000 is a perfect monopoly.
References
Hirschman, Albert O. 1945. "National power and structure of foreign trade." Berkeley, CA: University of California Press.
Herfindahl, Orris Clemens. 1950. "Concentration in the steel industry." Ph.D. dissertation, Columbia University.
Rhoades, Stephen A. 1993. "The herfindahl-hirschman index." Federal Reserve Bulletin 79: 188.
Waggoner, Philip D. 2018. "The hhi Package: Streamlined Calculation and Visualization of Herfindahl-Hirschman Index Scores." Journal of Open Source Software 3(28), 828.
Examples
a <- c(1,2,3,4) # arbitrary firm id
b <- c(20,30,40,10) # market share of each firm (should total 100% of market share)
x <- data.frame(a,b) # create data frame
hhi(x, "b") # calculate market concentration based on firms' share sizes