Industrial organization is the field of economics that builds on the theory of the firm in examining the structure of, and boundaries between, firms and markets.
The subject has been described as concerned with markets that "cannot easily be analyzed using the standard textbook competitive model." Industrial organization adds to the perfectly competitive model real-world frictions such as transaction costs, limited information, and barriers to entry of new firms that may be associated with imperfect competition. It analyzes determinants of firm and market organization and behavior as between competition and monopoly, including from government actions.
There are different approaches to the subject. One is descriptive in providing an overview of industrial organization, such as measures of competition and the size-concentration of firms in an industry. A second uses microeconomic models to explain internal firm organization and market strategy. As to strategic firm interaction, non-cooperative game theory has become the standard unifying method of analysis. A third aspect is oriented to public policy as to economic regulation and antitrust law.
The development of industrial organization as a separate field owes much to Edward Chamberlin, Edward S. Mason, and Joe S. Bain.
Read more about Industrial Organization: Structure, Conduct, Performance, Market Structures, Areas of Study, History of The Field
Famous quotes containing the words industrial and/or organization:
“The Enormous Room seems to me to be the book that has nearest approached the mood of reckless adventure in which men will reach the white heat of imagination needed to fuse the soggy disjointed complexity of the industrial life about us into seething fluid of creation. There can be no more playing safe.”
—John Dos Passos (1896–1970)
“To fight oppression, and to work as best we can for a sane organization of society, we do not have to abandon the state of mind of freedom. If we do that we are letting the same thuggery in by the back door that we are fighting off in front of the house.”
—John Dos Passos (1896–1970)