Industrial Organization - Areas of Study

Areas of Study

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

  • Price discrimination
  • Product differentiation
  • Durable goods
  • Experience goods
  • Secondary markets or second-hand markets, which can affect the behaviour of firms in primary markets.
  • Collusion
  • Signalling, such as warranties and advertising.
  • Mergers and acquisitions
  • Entry and Exit

A competitive market structure has the performance outcome of lower costs and lower prices, (Shepherd, W: 1997:4).

The subject has a theoretical side and a practical side. According to one text book: "On one plane the field is abstract, a set of analytical concepts about competition and monopoly. On a second plane the topic is about real markets, teeming with the excitement and drama of struggles among real firms" (Shepherd, W.; 1985; 1).

The extensive use of game theory in industrial economics has led to the export of this tool to other branches of microeconomics, such as behavioral economics and corporate finance. Industrial organization has also had significant practical impacts on antitrust law and competition policy.

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