Outline of Industrial Organization - Concepts

Concepts

Production side of Industry:

• Production theory
  • production efficiency
  • factors of production
  • total, average, and marginal product curves
  • marginal productivity
  • isoquants & isocosts
  • the marginal rate of technical substitution

• Production function
  • inputs
  • diminishing returns to inputs
  • the stages of production
  • shifts in a production function

• Economic rent
  • classical factor rents
  • Paretian factor rents

• Production possibility frontier
  • what products are possible given a set of resources
  • the trade-off between producing one product rather than another
  • the marginal rate of transformation

Cost side of Industry:

• Cost theory
  • Different types of costs
    • opportunity cost
    • accounting cost or historical costs
    • transaction cost
    • sunk cost
    • marginal cost
  • The isocost line

• Cost-of-production theory of value

• Long-run cost and production functions
  • long-run average cost
  • long-run production function and efficiency
  • returns to scale and isoclines
  • minimum efficient scale
  • plant capacity

• Economies of density
  • Economies of scale
    • the efficiency consequences of increasing or decreasing the level of production.
  • Economies of scope
    • the efficiency consequences of increasing or decreasing the number of different types of products produced, promoted, and distributed.
  • Network effect
    • the effect that one user of a good or service has on the value of that product to other people.

• Optimum factor allocation
  • output elasticity of factor costs
  • marginal revenue product
  • marginal resource cost

• Pricing and various aspects of the pricing decision
  • Transfer pricing
    • selling within a multi-divisional company
  • Joint product pricing
    • price setting when two products are linked
  • Price discrimination
    • different prices to different buyers
    • types of price discrimination
  • Yield management
  • Price skimming
    • price discrimination over time
  • Two part tariffs
    • charging a price composed of two parts, usually an initial fee and an ongoing fee
  • Price points
    • the effects of a non-linear demand curve on pricing
  • Cost-plus pricing
    • a markup is applied to a cost term in order to calculate price
    • cost-plus pricing with elasticity considerations
    • cost plus pricing is often used along with break even analysis
  • Rate of return pricing
    • calculate price based on the required rate of return on investment, or rate of return on sales

• Profit maximization
  • determining the optimum price and quantity
  • the totals approach
  • marginal approach of production