Entropy index (EI) borrowedinformation theory The concept of entropy has the meaning of average information, and its definition formula is:
Where, EI is the entropy index;SiIs the market share (sales or added value, etc.) of the i-th enterprise;N is the total number of enterprises in the market.[1]
The larger the EI value, the smaller the market concentration. The smaller the EI value, the greater the market concentration.
Similarities and differences
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E index and HHI index have some common points: both are comprehensive indexes, which reflect the situation of all enterprises in the market;Both are the sum of the market shares of the enterprise.
E Index vsHHI IndexThere are also some differences: the weights assigned to each enterprise's market share are different. The weight of HHI index is market share, while E index is based on the logarithm of the reciprocal of market share;The two give different weights to small enterprises. The E index gives more weight to small enterprises, which are vulnerable to the number of enterprises with a share of less than 1%, while the HHI index is basically not affected by this.
