Some notes on applying the Herfindahl–Hirschman Index

Matsumoto, Akio; Merlone, Ugo; Szidarovszky, Ferenc

doi:10.1080/13504851.2011.570705

Cited by 63 publications

(28 citation statements)

References 13 publications

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“…Since one of the main objectives of this paper is to analyze the correlation between market liberalization and competitiveness, we have selected factors that reflect the assumed higher intensity of competition. Market concentration is generally measured by the Herfindahl-Hirschman index (HHI) [23] and, for rail freight markets, applicable references exist, e.g., Crozet, 2016 [24]. Although in his paper, Crozet leaves the question open as to whether high market concentration in the rail freight industry should be regulated or whether this situation leads to high(er) competitiveness.…”

Section: Theory/literature Overview On Competitiveness Factors Of Raimentioning

confidence: 99%

Principal Component Analysis of the Potential for Increased Rail Competitiveness in East-Central Europe

Duleba

Farkas

2019

Sustainability

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Increased rail competitiveness has been the objective of many countries around the world, including member states of the EU. Although railway market liberalization has always been accompanied by high expectations of increased efficiency and competitiveness, the overall impact of such decisions can be considered controversial. This paper aims to contribute to the scientific debate by conducting a factor analysis of some East-Central European countries from the aspect of rail freight competitiveness. Since many highly correlated factors influence competitiveness, its mathematical–statistical representation and analysis is difficult due to the high number of dimensions of the factor space. Moreover, competitiveness cannot be measured directly only as a latent variable which is a feature of Principal Component Analysis (PCA). The introduced PCA, model by way of reducing the number of dimensions, can highlight the relations among the attributes and determine the most crucial issues capable of increasing rail competitiveness in the given countries and also of clustering those national railway markets. Recommendations for structural changes in national rail freight markets of the region are also supplied. Our results show that international rail competitiveness depends rather on market efficiency than on market liberalization due to the fact that the Global Competitiveness Index and Export/Import attributes did not significantly correlate with market concentration. As for the larger domestic rail freight sectors, small freight forwarders—spawned by liberalization—are shown to play a significant role in increasing competitiveness.

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Section: Theory/literature Overview On Competitiveness Factors Of Raimentioning

confidence: 99%

Principal Component Analysis of the Potential for Increased Rail Competitiveness in East-Central Europe

Duleba

Farkas

2019

Sustainability

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“…Evaluation of efficiency is an integral part of rational behavior of the production units that aims to survive in a challenging competitive environment in a long term. In practice it is possible to apply several methods to verify the level of efficiency [7,22,27,28], namely: (i) financial ratios; (ii) indexes; (iii) multicriteria evaluation of variants; (iv) statistical-econometric methods; (v) simulation.…”

Section: Theoretical Frameworkmentioning

confidence: 99%

Non-Parametric Approach to Measuring the Efficiency of Banking Sectors in European Union Countries

2018

APH

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The European banking sector has been in the center of interest for the last ten years. There are several reasons for this: An impact of global financial crisis on banks stability; Fundamental influence of banking sector on the effectiveness of governments' anti-crisis actions, Vulnerability of banking institutions to the crisis of the Euro currency and last, but not least, the problems of the biggest banks in Italy and Germany, which for the last decades have been considered as the most efficient. The financial crisis and its negative influence, not only on the small national banks, but also on the strongest International Institutions, has shown that the problem of measurement of efficiency of the banking sector is still a current topic, important not only from the perspective of academic research, but also form the point of view of National and International Regulators. In this context, the objective of this study is to propose a methodology for a comprehensive evaluation of operational efficiency of the banking sectors in EU countries. The pointed problem is often discussed in a nonlinear fashion. Thus, the potential methodological proposal should be based on the interaction of multiple inputs with multiple outputs, without the knowledge of the functional relationships between them. In the research, Data Envelopment Analysis, is given as a suitable instrument for this purpose. Thanks to this methodology we measured the degree of (in)efficiency of banking sectors in the EU countries. Additionally, we proposed measures to increase their efficiency. We found that there are differences between the efficiency of banking sectors of "old" fifteen and "new" EU member countries. We also confirmed that there is a noticeable difference between the efficiency of banking sectors within the European Monetary Union members and Countries which do not belong to the Euro-zone.

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“…It is calculated as the sum of squares of the share of the products of all firms in the industry. If pure monopoly in an industry, the index is equal to 100% and if 100 are equal, then 1%, therefore, the values lie in the range (0, 100%) (Matsumoto et al, 2012). In the U.S. highly monopolized is considered the industry in which Herfindahl-Hirschman index is over 18%.…”

Section: Methodsmentioning

confidence: 99%

Assessing of the Competitiveness Level in the Industry using the Correlation Analysis on the Example of Agriculture of the Republic of Tatarstan, Russian Federation

Khasanova¹,

Fazullina²

2015

American Journal of Agricultural and Biological Sciences

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This study presents the results of evaluation of the competitiveness of farmers and the agricultural sector in the region as a whole. Traditional approach of estimating monopolization level uses Herfindahl-Hirshman and Lerner indexes. But this methods not applicable in case of inhomogeneity of product in industry or when firms manufacture different type of products. The evaluation was performed by using the instruments of fuzzy set theory and the correlation analysis. This technique allows us to estimate the degree of monopolization of the industry and its sub-sectors, as well as to hold a comparative analysis and to identify trends of development. Technique consists several steps. Determine the maximum amount of product produced by any company in the sector in the period and the percentage of the volume of production from which the company can be named as leader. Fuzzy numbers of leadership are calculated for each firm's product. If the company produces more than one product, the fuzzy numbers for each product are aggregated into one by using the fuzzy operation "or". Depending on the percentage level in the industry will change and the number of companies that are recognized as leaders. Simulations proved that correlation between percentage level and number of leaders in industry depends on market structure: Monopoly, oligopoly or pure competition. Correlation coefficient tends from -1 for the monopolized industries to 0 for pure competition. We provided computer simulation to calculate the boundaries of correlation coefficient to identify types of market structure. The analysis was held according to the industrial and economic activity of all 509 agricultural enterprises and 13 types of products in Republic Tatarstan of Russian Federation during 2011-2013. The obtained results are comparable with the results of the calculation the Herfindahl-Hirschman index for each product. However, the proposed technique allows us to make a general assessment of industry's competitiveness. The technique has an applied significance in the development of government support measures.

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Some notes on applying the Herfindahl–Hirschman Index

Cited by 63 publications

References 13 publications

Principal Component Analysis of the Potential for Increased Rail Competitiveness in East-Central Europe

Principal Component Analysis of the Potential for Increased Rail Competitiveness in East-Central Europe

Non-Parametric Approach to Measuring the Efficiency of Banking Sectors in European Union Countries

Assessing of the Competitiveness Level in the Industry using the Correlation Analysis on the Example of Agriculture of the Republic of Tatarstan, Russian Federation

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