To calculate the HHI, you need to follow these steps:
Identify the market shares of all firms in the industry. Square each firm's market share. Sum all the squared market shares to get the HHI.
For example, if an industry has four firms with market shares of 30%, 30%, 20%, and 20%, the HHI would be calculated as follows: HHI = 302 + 302 + 202 + 202 = 900 + 900 + 400 + 400 = 2600.