Discussion paper

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

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.

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Citation

Spiegel, Y (2019), ‘DP13925 The Herfindahl-Hirschman Index and the distribution of social surplus‘, CEPR Discussion Paper No. 13925. CEPR Press, Paris & London. https://cepr.org/publications/dp13925