What's Industrial organization? (Cont Industrial organization adds real-world complications to the perfectly competitive model, complications 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
What’s Industrial organization? (Cont.) • Industrial organization adds real-world complications to the perfectly competitive model, complications 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
Definitions of market The world of commercial activity where goods and services are bought and sold 2. A market is a mechanism which allows people to trade, normally governed by the theory of supply and demand, so allocating resources through a price mechanism and bid and ask matching so that those willing to pay a price for something meet those willing to sell for it en.wikipedia. org/wiki/Market 3. The central function of markets is to coordinate allocations of resources.( Cason 2000)
Definitions of Market 1. The world of commercial activity where goods and services are bought and sold. 2. A market is a mechanism which allows people to trade, normally governed by the theory of supply and demand, so allocating resources through a price mechanism and bid and ask matching so that those willing to pay a price for something meet those willing to sell for it. ... en.wikipedia.org/wiki/Market 3. The central function of markets is to coordinate allocations of resources. (Cason 2000)
Introduction Two extreme market forms/structures(in the sense of many extreme assumptions made) Having extreme market forms in picture however helps Perfect Monopoly competition PC-Ideal market form(analogous to frictionless surface in physics) Monopoly- Under certain conditions, the least desirable market organization Industrial organization- Study of market organizations in between these two extremes
Introduction • Two extreme market forms/structures (in the sense of many extreme assumptions made). • Having extreme market forms in picture however helps. • PC- Ideal market form (analogous to frictionless surface in physics) • Monopoly- Under certain conditions, the least desirable market organization. • Industrial organization- Study of market organizations in between these two extremes
how do we do that? By relaxing the assumptions of the two extreme market forms
How do we do that? By relaxing the assumptions of the two extreme market forms
Four facts Our approach to analyzing industry behavior is based on four stylized facts >Concentration >Product characteristics Costly activities > Research and development (Oz Shy PI
Four Facts Our approach to analyzing industry behavior is based on four stylized facts: Concentration Product Characteristics Costly activities Research and development (Oz Shy P1)