HHI is defined by the sum of squares of the participation of each company when compared to the industry’s total size. This index considers all the companies in the industry and is calculated as follows:

N

HHI = £ Pi2 (2)

i=1

where P is the market share of firm i in the market and n is the number of firms. The Herfindahl-Index (H) ranges from 1/N to one, where N is the number of firms in the market. Equivalently, if percents are used as whole numbers, as in 75 instead of 0.75, the index can range from 10,000/n, when companies have an equalitarian participation in the market, up to 10,000 (monopoly). The HHI increases according to the increase of inequality among the companies belong­ing to the industry, thus being a good indicator of the market situation. Do note that the company size is considered by its squared participation (Pi), i. e., smaller companies have a smaller role in this index. Thus, the higher the index, the more concentrated the market is, and, as a consequence, smaller the competition among companies is.

According to Usdoj (1997), the market is not concentrated when the HHI value is under 1,000, it is moderately concentrated between 1,000 and 1,800, and it is highly concentrated when it reaches a value higher than 1,800. This research sought to use the companies’ integrality, where we used secondary data regarding the biodiesel production in m3 from January 2005 to December 2012.