The correct statement about the Herfindahl index is:
It measures the degree of concentration in an industry.
The Herfindahl index (HHI) is a measure used to assess market concentration and is calculated by squaring the market share of each firm in the industry and then summing those values. Higher values indicate a higher degree of concentration, which can imply less competition in the market. The other statements provided are incorrect in the context of the Herfindahl index.