Picture Source (25/11/2018): https://pixabay.com/en/refugees-economic-migrants-1015294/
This calculator uses the Harmony in Gradation formula which is more reliable than the existing formula, HHI (Herfindahl Hirschman Index).
The result obtained from this calculator is the competition index and the competition level in the industry, where the competition index = 1 declares the competition to be in perfect condition, the index = 0.75 is the smallest boundary of competition being fair, and index = 0.5 is the smallest value limit that the competition is not in an unfair Level. These results are still accurate and reliable, regardless of the number of providers or the number of factories.
The Competition Law is used as a tool to maintain the sustainability of industry which is believed to happen when an industry has been run fair. In detail, the first step of the law is to measure the “Competition Level” on an industry consisting of several firms, and if the result indicates that it is unfair, the Economic Judge may order steps to make the firms can compete fairly. One possibility, not yet certain because there are many other considerations, is to force firms that have a small market to merge. The weakness of the current formula, the Herfindahl-Hirschman Index (HHI), contains only the “The Harmony” element, as a result that the judge may make the wrong decision, because they see the HHI generated index which happens in the simulation of merge situation (that means the number of firms is fewer) that does not change significantly, whereas by using Harmony in Gradation there will be a significant index change which can show the correct situation.
Procedure: 1. Fill in the N = the number of providers or factories; 2. Fill the Market of the providers or factories; 3. Click “Calculate”.
|Provider 1 Market:|
|The Number of Provider or Factory (N):|
|Index of Perfect Competition:|