Intuition
When all the firms in an industry have equal market shares, H = 1/N. The Herfindahl is correlated with the number of firms in an industry because its lower bound when there are N firms is 1/N. An industry with 3 firms cannot have a lower Herfindahl than an industry with 20 firms when firms have equal market shares. But as market shares of the 20-firm industry diverge from equality the Herfindahl can exceed that of the equal-market-share 3-firm industry (e.g., if one firm has 81% of the market and the remaining 19 have 1% each H=0.658). A higher Herfindahl signifies a less competitive industry.
Read more about this topic: Herfindahl Index
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“Reason is sight. Instinct is touch. Intuition is smell.”
—Mason Cooley (b. 1927)
“All appeared new, and strange at first, inexpressibly rare and delightful and beautiful. I was a little stranger, which at my entrance into the world was saluted and surrounded with innumerable joys. My knowledge was divine. I knew by intuition those things which since my Apostasy, I collected again by the highest reason.”
—Thomas Traherne (1636–1674)