Introduction Industrial Organization: The S-C-P
(structure-conduct-performance)

1. Issues in Industrial Organization
2. History and theoretical influences
3. The S-C-P analytical framework

In IO look at the environment: customers, providers, competitors, bank…

Learning objectives
This chapter covers the following topics : * Static & dynamics views of competition * The structure-conduct-performance paradigm * The Chicago school approach to the study of competition

Key terms

Austrian school
Chicago school
Collusion hypothesis
Distinctive capabilities
Efficiency hypothesis
Five forces model
New industrial organization
SCP paradigm
Value chain

Issues in industrial Organization

« Dynamic analysis of the production system through market structures, strategies of firms and their performances. »

« IO studies production and market behaviours of firms, as well as competitive interactions between them» : all decisions of firm have make with interaction between the different firm.

“Industrial organization is a field of economics that studies the structure of and boundaries between firms and markets and the strategic interactions of firms. The study of industrial organization adds to the perfectly competitive model real-world frictions such as limited information, transaction costs, costs of adjusting prices, government actions, and barriers to entry by new firms into a market that may be associated with imperfect competition. It then considers how firms are organized and how they compete” (source Wikipedia).

* Issues:

* Small number markets and industrial concentration * Market power and strategies of firms

Is the firm size compatible with competition on the market?

*industry: branche/secteur
* mesoeconomics: middle economic level
* field of IO: the economic of scale (économie d’echelle)

* Opposition of 2 schools:
- Chicago school (Stigler, Friedman, Reder…)
The Chicago school is