We can use our Unit Market Share column to compute how competitive a market is. The competitiveness of a market is determined by how many businesses operate within that market and their percentage market shares relative to one another. We can determine the competitiveness of a market by computing the Herfindahl–Hirschman Index. The Herfindahl–Hirschman Index is computed by summing the squares of the individual market shares for competitors within a market. To compute the Herfindahl–Hirschman Index, do the following:
- Create a column in the R04_Table table with the following formula:
HHI = POWER('R04_Table'[Unit Market Share],2)- Format the HHI column as a percentage.
- On a Report page, create a Card visualization and place the HHI column into the Fields area for the visualization.
- Ensure that the default aggregation for the HHI column is set to Sum.
In our example, the Card visualization displays 29.52%. A Herfindahl–Hirschman Index greater than 25% indicates a high market concentration.