The Herfindahl-Hirschman Index as a decision guide to business concentration: A statistical exploration

George Djolov ()
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George Djolov: University of Stellenbosch, Postal: Socio-Economic Integration Unit, Statistics South A, frica, University of Stellenbosch, Pretoria, South, Africa

Journal of Economic and Social Measurement, 2013, issue 3, 201-227

Abstract: This article examines whether the Herfindahl-Hirschman Index (HHI) is a reliable decision-making tool of business concentration. The statistical properties of the index are considered in order to facilitate an improved statistical decision-making with the index. A misinformed application of the HHI as to its statistical characteristics has encouraged questionable uses and applications of the index. It has also limited its potential uses. Understanding the statistical nature of the HHI reveals that there is more to this index than known heretofore.

Keywords: Business concentration; Herfindahl-Hirschman Index; relative variability (search for similar items in EconPapers)
JEL-codes: E00 G00 M20 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:iosjes:0001

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