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    Chapter 1 SM Kel.1

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    Jemi Juneldi
    This document provides an introduction to industrial economics. It discusses how industrial economics studies firm behavior in industries and policies toward rivals and customers, focusing on oligopoly market structures. It also examines how government policy can impact markets through antitrust policy, regulation, and ownership. Two schools of thought on monopoly power are described - one arguing it is a persistent feature of markets, while another argues government interference is the main source. The structure-conduct-performance framework and its interactive version are shown, relating market structure to firm conduct and performance. Key questions for government policy on competition and markets are listed. Different views on the role of government from the structure-conduct-performance approach and Chicago School are briefly outlined.

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    © All Rights Reserved
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    Chapter 1 SM Kel.1

    Uploaded by

    Jemi Juneldi
    30 views14 pages
    This document provides an introduction to industrial economics. It discusses how industrial economics studies firm behavior in industries and policies toward rivals and customers, focusing on oligopoly market structures. It also examines how government policy can impact markets through antitrust policy, regulation, and ownership. Two schools of thought on monopoly power are described - one arguing it is a persistent feature of markets, while another argues government interference is the main source. The structure-conduct-performance framework and its interactive version are shown, relating market structure to firm conduct and performance. Key questions for government policy on competition and markets are listed. Different views on the role of government from the structure-conduct-performance approach and Chicago School are briefly outlined.

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    This document provides an introduction to industrial economics. It discusses how industrial economics studies firm behavior in industries and policies toward rivals and customers, focusing on oligopoly market structures. It also examines how government policy can impact markets through antitrust policy, regulation, and ownership. Two schools of thought on monopoly power are described - one arguing it is a persistent feature of markets, while another argues government interference is the main source. The structure-conduct-performance framework and its interactive version are shown, relating market structure to firm conduct and performance. Key questions for government policy on competition and markets are listed. Different views on the role of government from the structure-conduct-performance approach and Chicago School are briefly outlined.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    30 views14 pages

    Chapter 1 SM Kel.1

    Uploaded by

    Jemi Juneldi
    This document provides an introduction to industrial economics. It discusses how industrial economics studies firm behavior in industries and policies toward rivals and customers, focusing on oligopoly market structures. It also examines how government policy can impact markets through antitrust policy, regulation, and ownership. Two schools of thought on monopoly power are described - one arguing it is a persistent feature of markets, while another argues government interference is the main source. The structure-conduct-performance framework and its interactive version are shown, relating market structure to firm conduct and performance. Key questions for government policy on competition and markets are listed. Different views on the role of government from the structure-conduct-performance approach and Chicago School are briefly outlined.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 14

    Stephen Martin

    Chapter 1
    Kelompok 1:
    Jemi Juneldi
    Panji Dekantari
    Resi Yunita
    Introduction

    The subject matter of industrial economics is the At fundamental level, there is no


    behavior of firms in industries. Industrial difference between industrial
    economics study the policies of firms toward rivals economics and what is sometimes
    and customers (which includes at least prices, called prices theory
    advertising, and research and development

    1. Microeconomics focus o simple market structures- competition


    and monopoly
    2. Industrial Economics concern on oligopoly; the type of market
    in which firm are neither monopolist nor perfect competitors
    Questions for Government Policies in markets

    ▫ In what sorts Will firm be able to exercise monopoly power-control


    over price?
    ▫ In what sorts markets will cartels work?
    ▫ In what sorts markets will cartels break dwon?
    ▫ Can firm act in such a way as to make environment less competitive? If
    the answer yes, can the government do anything about it?
    ▫ Should the government to set the rules for competition that will improve
    the way markets work?
    Another factor that distuingish industrial economics from microeconomics

    Industrial economics concern government policy


    toward business includes anti trust policy,
    regulation and public ownership of business

    Exercise monopoly power-control over price


    Two schools of thought have long contested the
    analysis of industrial economics

    One groups of economist feels that the private exercise of


    monopoly power is a persistent feature of many markets

    Monopoly strategic behavior of firms

    Another group argue that anything one firm can do can be done by any other equally
    efficient firm, unless some higher power intervenes.
    The main source of monopoly power is government interference on
    marketplace
    Structure-Conduct-Performance

    “
    Structure Conduct Performences

    Figure 1-1 The linear structure-


    conduct-performance framework
    Progressiveness
    Profitability

    Technology Structure

    “ Demand
    Strategy

    Conduct
    Performence

    Figure 1-2 The Interactive Structure-Conduct-


    7 Sales Effort Performance
    framework
    Structure
    1. Number and Distribution of Sellers
    2. Number and Distribution of Buyers
    3. Product Differentiation
    4. Entry Conditions

    Performance
    Conduct
    1. Profitability
    1. Collusion
    2. Efficiency
    2. Strategic Behavior
    3. Progressiveness
    3. Advertising
    4. Interactions
    ▫ How large must a firm to produce efficiently ?
    ▫ How large an investment must a firm make to begin
    operations?
    ▫ If a firm enter market and fails, how much of its investment
    can be recovered by selling off assets and how much will be
    sunk in the market?
    ▫ What sorts of sales efforts, if any, will bee needed for a
    successful operations?
    ▫ Who will established firms react to the prospect of new
    competition?
    Methodology

    The methodology of the structure-conduct-


    performance approach has consisted of drawing
    general propositions from empirical observations

    10
    The Chicago School

    The Chicago School The position the best thing a government can
    do to bring about desirable market performance is to stand back and let
    maket forces work has been pursued by what has come
    Technology and freedom f entry determining
    market structure, with freedom of entry
    Technology guaranteeing optimal conduct and performance

    Structure

    Freedom of Entry
    Conduct

    Figure 1-3 The Chicago Performance


    Framework
    Synthesis: The “New” Industrial Economics
    Thank You 

    14

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