How to use market concentration index to reflect enterprise scale?

The market concentration index, also known as HHI, was put forward by the US Department of Justice in 1982.

HHI index is equal to the sum of squares of each enterprise's market share in the market. For example, there are 10 enterprises in the market, each enterprise's market share is 10%, and its HHI index is10 ×10 =1000.

The HHI index is lower than 1000, and there is no restriction on industry mergers and acquisitions. Mergers and acquisitions between 1000- 1800 will lead to an increase in HHI of no more than 100, and mergers and acquisitions exceeding 1800 will not exceed 50.

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