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:
“A few ideas seem to be agreed upon. Help none but those who help themselves. Educate only at schools which provide in some form for industrial education. These two points should be insisted upon. Let the normal instruction be that men must earn their own living, and that by the labor of their hands as far as may be. This is the gospel of salvation for the colored man. Let the labor not be servile, but in manly occupations like that of the carpenter, the farmer, and the blacksmith.”
—Rutherford Birchard Hayes (1822–1893)
“Democracy is the wholesome and pure air without which a socialist public organization cannot live a full-blooded life.”
—Mikhail Gorbachev (b. 1931)