DP13925 The Herfindahl-Hirschman Index and the distribution of social surplus

Author(s): Yossi Spiegel
Publication Date: August 2019
Date Revised: December 2019
Keyword(s): Consumer surplus, HHI, oligopoly, producer surplus
JEL(s): D43, L41
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=13925

I show that in a broad range of oligopoly models where firms have (not necessarily identical) constant marginal cost, HHI is an increasing function of the ratio of producers' surplus and consumers' surplus and therefore reflects the division of surplus between firms' owners and consumers.