Industrial organization

The field studies how firms and markets are organized and how they behave across a spectrum ranging from competitive markets to monopoly, including cases shaped by government intervention and regulation.

Industrial organization combines theoretical models and empirical analysis to study issues such as market power, competition policy, oligopoly behavior, pricing strategies, vertical integration, and the design of contracts and institutions. It has applications in public policy, business strategy, and the regulation of industries.

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 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 related to economic regulation, antitrust law, and, more generally, the economic governance of law in defining property rights, enforcing contracts, and providing organizational infrastructure.

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.

The development of industrial organization as a separate field owes much to Edward Chamberlin, Joan Robinson, Edward S. Mason, J. M. Clark, Joe S. Bain and Paolo Sylos Labini, among others.

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, Firm Strategy, and Market Performance

JEL: L2 – Firm Objectives, Organization, and Behavior

JEL: L3 – Non-profit organizations and Public enterprise

JEL: L4 – Antitrust Issues and Policies

JEL: L5 – Regulation and Industrial policy

JEL: L6 – Industry Studies: Manufacturing

JEL: L7 – Industry Studies: Primary Products and Construction

JEL: L8 – Industry Studies: Services

JEL: L9 – Industry Studies: Transportation and Utilities