economics Economics () is a behavioral science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interac ...

, industrial organization is a field that builds on the

theory of the firm The theory of the firm consists of a number of economic theories that explain and predict the nature of the firm, company, or corporation, including its existence, behaviour, structure, and relationship to the market. Firms are key drivers in eco ...

by examining the structure of (and, therefore, the boundaries between) firms and markets. Industrial organization adds real-world complications to the perfectly competitive model, complications such as

transaction cost In economics, a transaction cost is a cost incurred when making an economic trade when participating in a market. The idea that transactions form the basis of economic thinking was introduced by the institutional economist John R. Commons in 1 ...

s, limited

information Information is an Abstraction, abstract concept that refers to something which has the power Communication, to inform. At the most fundamental level, it pertains to the Interpretation (philosophy), interpretation (perhaps Interpretation (log ...

, and

barriers to entry In theories of Competition (economics), competition in economics, a barrier to entry, or an economic barrier to entry, is a fixed cost that must be incurred by a new entrant, regardless of production or sales activities, into a Market (economics) ...

of new firms that may be associated with

imperfect competition In economics, imperfect competition refers to a situation where the characteristics of an economic market do not fulfil all the necessary conditions of a perfectly competitive market. Imperfect competition causes market inefficiencies, resulting in ...

. It analyzes determinants of firm and market organization and behavior on a continuum between

competition Competition is a rivalry where two or more parties strive for a common goal which cannot be shared: where one's gain is the other's loss (an example of which is a zero-sum game). Competition can arise between entities such as organisms, indi ...

and

monopoly A monopoly (from Greek language, Greek and ) is a market in which one person or company is the only supplier of a particular good or service. A monopoly is characterized by a lack of economic Competition (economics), competition to produce ...

, including from government actions. There are different approaches to the subject. One approach is descriptive in providing an overview of industrial organization, such as measures of competition and the size-

concentration In chemistry, concentration is the abundance of a constituent divided by the total volume of a mixture. Several types of mathematical description can be distinguished: '' mass concentration'', '' molar concentration'', '' number concentration'', ...

of firms in an industry. A second approach uses microeconomic models to explain internal firm organization and market strategy, which includes internal research and development along with issues of internal reorganization and renewal. A third aspect is oriented to

public policy Public policy is an institutionalized proposal or a Group decision-making, decided set of elements like laws, regulations, guidelines, and actions to Problem solving, solve or address relevant and problematic social issues, guided by a conceptio ...

related to

economic regulation Regulatory economics is the application of law by government or regulatory agencies for various economics-related purposes, including remedying market failure, protecting the environment and economic management. Regulation Regulation is gener ...

antitrust law Competition law is the field of law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. Competition law is implemented through public and private enforcement. It is also known as antitrust ...

, and, more generally, the economic governance of law in defining property rights, enforcing contracts, and providing organizational

infrastructure Infrastructure is the set of facilities and systems that serve a country, city, or other area, and encompasses the services and facilities necessary for its economy, households and firms to function. Infrastructure is composed of public and pri ...

. The extensive use of

game theory Game theory is the study of mathematical models of strategic interactions. It has applications in many fields of social science, and is used extensively in economics, logic, systems science and computer science. Initially, game theory addressed ...

in industrial economics has led to the export of this tool to other branches of

microeconomics Microeconomics is a branch of economics that studies the behavior of individuals and Theory of the firm, firms in making decisions regarding the allocation of scarcity, scarce resources and the interactions among these individuals and firms. M ...

, such as

behavioral economics Behavioral economics is the study of the psychological (e.g. cognitive, behavioral, affective, social) factors involved in the decisions of individuals or institutions, and how these decisions deviate from those implied by traditional economi ...

and

corporate finance Corporate finance is an area of finance that deals with the sources of funding, and the capital structure of businesses, the actions that managers take to increase the Value investing, value of the firm to the shareholders, and the tools and analy ...

. Industrial organization has also had significant practical impacts on

and

competition policy Competition law is the field of law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. Competition law is implemented through public and private enforcement. It is also known as antitrust ...

. The development of industrial organization as a separate field owes much to Edward Chamberlin,

Joan Robinson Joan Violet Robinson ( Maurice; 31 October 1903 – 5 August 1983) was a British economist known for her wide-ranging contributions to economic theory. One of the most prominent economists of the century, Robinson incarnated the "Cambridge Sc ...

, Edward S. Mason, J. M. Clark, Joe S. Bain and Paolo Sylos Labini, among others.E. T. Grether, 1970. "Industrial Organization: Past History and Future Problems", ''American Economic Review'', 60(2), pp
83
��89.

Subareas

The Journal of Economic Literature (JEL) classification codes are one way of representing the range of economics subjects and subareas. There, Industrial Organization, one of 20 primary categories, has 9 secondary categories, each with multiple tertiary categories. The secondary categories are listed below with corresponding available article-preview links of The New Palgrave Dictionary of Economics Online and footnotes to their respective JEL-tertiary categories and associated New-Palgrave links.
JEL: L1
–

Market Structure Market structure, in economics, depicts how firms are differentiated and categorised based on the types of goods they sell (homogeneous/heterogeneous) and how their operations are affected by external factors and elements. Market structure makes i ...

, Firm Strategy, and Market Performance
JEL: L2
– Firm Objectives, Organization, and Behavior
JEL: L3
–

Non-profit organizations A nonprofit organization (NPO), also known as a nonbusiness entity, nonprofit institution, not-for-profit organization, or simply a nonprofit, is a non-governmental (private) legal entity organized and operated for a collective, public, or so ...

and Public enterprise
JEL: L4
–

Antitrust Competition law is the field of law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. Competition law is implemented through public and private enforcement. It is also known as antitrust l ...

Issues and Policies
JEL: L5
–

Regulation Regulation is the management of complex systems according to a set of rules and trends. In systems theory, these types of rules exist in various fields of biology and society, but the term has slightly different meanings according to context. Fo ...

and

Industrial policy Industrial policy is proactive government-led encouragement and development of specific strategic industries for the growth of all or part of the economy, especially in absence of sufficient private sector investments and participation. Historica ...

JEL: L6
– Industry Studies:

Manufacturing Manufacturing is the creation or production of goods with the help of equipment, labor, machines, tools, and chemical or biological processing or formulation. It is the essence of the secondary sector of the economy. The term may refer ...

JEL: L7
– Industry Studies: Primary Products and Construction
JEL: L8
– Industry Studies: Services
JEL: L9
– Industry Studies:

Transportation Transport (in British English) or transportation (in American English) is the intentional Motion, movement of humans, animals, and cargo, goods from one location to another. Mode of transport, Modes of transport include aviation, air, land tr ...

and

Utilities A public utility company (usually just utility) is an organization that maintains the infrastructure for a public service (often also providing a service using that infrastructure). Public utilities are subject to forms of public control and r ...

Market structures

The common

market structure Market structure, in economics, depicts how firms are differentiated and categorised based on the types of goods they sell (homogeneous/heterogeneous) and how their operations are affected by external factors and elements. Market structure makes i ...

s studied in this field are:

perfect competition In economics, specifically general equilibrium theory, a perfect market, also known as an atomistic market, is defined by several idealizing conditions, collectively called perfect competition, or atomistic competition. In Economic model, theoret ...

monopolistic competition Monopolistic competition is a type of imperfect competition such that there are many producers competing against each other but selling products that are differentiated from one another (e.g., branding, quality) and hence not perfect substi ...

duopoly A duopoly (from Greek , ; and , ) is a type of oligopoly where two firms have dominant or exclusive control over a market, and most (if not all) of the competition within that market occurs directly between them. Duopoly is the most commonly ...

oligopoly An oligopoly () is a market in which pricing control lies in the hands of a few sellers. As a result of their significant market power, firms in oligopolistic markets can influence prices through manipulating the supply function. Firms in ...

, oligopsony,

and

monopsony In economics, a monopsony is a market structure in which a single buyer substantially controls the market as the major purchaser of goods and services offered by many would-be sellers. The Microeconomics, microeconomic theory of monopsony assume ...

Areas of study

Industrial organization investigates the outcomes of these market structures in environments with *

Price discrimination Price discrimination (differential pricing, equity pricing, preferential pricing, dual pricing, tiered pricing, and surveillance pricing) is a Microeconomics, microeconomic Pricing strategies, pricing strategy where identical or largely similar g ...

* Product differentiation *

Durable good In economics, a durable good or a hard good or consumer durable is a good that does not quickly wear out or, more specifically, one that yields utility over time rather than being completely consumed in one use. Items like bricks could be conside ...

s * Experience goods *

Collusion Collusion is a deceitful agreement or secret cooperation between two or more parties to limit open competition by deceiving, misleading or defrauding others of their legal right. Collusion is not always considered illegal. It can be used to att ...

* Signalling, such as warranties and advertising. *

Mergers and acquisitions Mergers and acquisitions (M&A) are business transactions in which the ownership of a company, business organization, or one of their operating units is transferred to or consolidated with another entity. They may happen through direct absorpt ...

Entry Entry may refer to: *Entry, West Virginia, an unincorporated community in the United States *Entry (cards), a term used in trick-taking card-games *Entry (economics), a term in connection with markets *Entry (film), ''Entry'' (film), a 2013 Indian ...

and Exit

History of the field

A 2009 book ''Pioneers of Industrial Organization'' traces the development of the field from

Adam Smith Adam Smith (baptised 1723 – 17 July 1790) was a Scottish economist and philosopher who was a pioneer in the field of political economy and key figure during the Scottish Enlightenment. Seen by some as the "father of economics"——— or ...

to recent times and includes dozens of short biographies of major figures in Europe and North America who contributed to the growth and development of the discipline.Henry W. de Jong and William G. Shepherd, ed., 2007. ''Pioneers of Industrial Organization.'' Cheltenham, UK: Elgar. Description and conten
links
an
preview
Other reviews by publication year and earliest available cited works those in 1970/1937, 1972/1933, 1974, 1987/1937-1956 (3 cites), 1968–9 (7 cites), 2009/c. 1900,Lefteris Tsoulfidis, 2009. "Between Competition and Monopoly", ''Competing Schools of Economic Thought'', ch. 9, pp
213
��42
Springer
/ref> and 2010/1951.Liran Einav and Jonathan Levin, 2010. "Empirical Industrial Organization: A Progress Report", ''Journal of Economic Perspectives'', 24(2), pp
145–162.
/ref>

Notes

References

* Tirole, Jean (1988). ''The Theory of Industrial Organization'', MIT press. * Belleflamme, Paul & Martin Peitz, 2010. ''Industrial Organization: Markets and Strategies''. Cambridge University Press
Summary
an
Resources
* Cabral, Luís M. B., 2000. ''Introduction to Industrial Organization''. MIT Press. Links t
Description
and chapter-previe
links.
* Shepherd, William, 1985. ''The Economics of Industrial Organization'', Prentice-Hall. * Shy, Oz, 1995. ''Industrial Organization: Theory and Applications''
Description
and chapter-previe
links.
MIT Press. * Vives, Xavier, 2001. ''Oligopoly Pricing: Old Ideas and New Tools''. MIT Press
Description
and scroll to chapter-previe
links.
* Jeffrey Church & Roger Ware, 2005. "Industrial Organization: A Strategic Approach", (ak

)”, Free Textbook * Nicolas Boccard, 2010. "Industrial Organization, a Contract Based approach (aka )”, Open Source Textbook

Journals

''The RAND Journal of Economics''

''International Journal of the Economics of Business''
and issue previe
links

''International Journal of Industrial Organization''
and issue-previe
links

''Journal of Industrial Economics''Aims and Scope
and issue-previe
links.

''Journal of Law, Economics, and Organization''
and issue-previe
links.

''Review of Industrial Organization''

External links

* {{Authority control Market (economics) Management cybernetics