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:
“Predatory capitalism created a complex industrial system and an advanced technology; it permitted a considerable extension of democratic practice and fostered certain liberal values, but within limits that are now being pressed and must be overcome. It is not a fit system for the mid- twentieth century.”
—Noam Chomsky (b. 1928)
“The organization controlling the material equipment of our everyday life is such that what in itself would enable us to construct it richly plunges us instead into a poverty of abundance, making alienation all the more intolerable as each convenience promises liberation and turns out to be only one more burden. We are condemned to slavery to the means of liberation.”
—Raoul Vaneigem (b. 1934)