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 Settlement ... is an experimental effort to aid in the solution of the social and industrial problems which are engendered by the modern conditions of life in a great city. It insists that these problems are not confined to any one portion of the city. It is an attempt to relieve, at the same time, the overaccumulation at one end of society and the destitution at the other ...”
—Jane Addams (1860–1935)
“The Red Cross in its nature, it aims and purposes, and consequently, its methods, is unlike any other organization in the country. It is an organization of physical action, of instantaneous action, at the spur of the moment; it cannot await the ordinary deliberation of organized bodies if it would be of use to suffering humanity, ... [ellipsis in original] it has by its nature a field of its own.”
—Clara Barton (1821–1912)