The following outline is provided as an overview of and topical guide to industrial organization:

Industrial organization In economics, industrial organization is a field that builds on the theory of the firm by examining the structure of (and, therefore, the boundaries between) firms and markets. Industrial organization adds real-world complications to the perf ...

– describes the behavior of firms in the marketplace with regard to production, pricing, employment and other decisions. Issues underlying these decisions range from classical issues such as

opportunity cost In microeconomic theory, the opportunity cost of a particular activity is the value or benefit given up by engaging in that activity, relative to engaging in an alternative activity. More effective it means if you chose one activity (for example ...

to neoclassical concepts such as

factors of production In economics, factors of production, resources, or inputs are what is used in the production process to produce output—that is, goods and services. The utilized amounts of the various inputs determine the quantity of output according to the relat ...

Overview

* a field of

economics Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analy ...

that studies: ** the strategic behavior of firms ** the structure of markets ***

Perfect competition In economics, specifically general equilibrium theory, a perfect market, also known as an atomistic market, is defined by several idealizing conditions, collectively called perfect competition, or atomistic competition. In theoretical models w ...

***

Monopolistic competition Monopolistic competition is a type of imperfect competition such that there are many producers competing against each other, but selling products that are differentiated from one another (e.g. by branding or quality) and hence are not perfec ...

***

Oligopoly An oligopoly (from Greek ὀλίγος, ''oligos'' "few" and πωλεῖν, ''polein'' "to sell") is a market structure in which a market or industry is dominated by a small number of large sellers or producers. Oligopolies often result f ...

***

Oligopsony An oligopsony (from Greek ὀλίγοι (''oligoi'') "few" and ὀψωνία (''opsōnia'') "purchase") is a market form in which the number of buyers is small while the number of sellers in theory could be large. This typically happens in a mark ...

***

Monopoly A monopoly (from Greek language, Greek el, μόνος, mónos, single, alone, label=none and el, πωλεῖν, pōleîn, to sell, label=none), as described by Irving Fisher, is a market with the "absence of competition", creating a situati ...

*** Monopsony ** and the interactions between them

Concepts

Production side of Industry: *

Production theory Production is the process of combining various inputs, both material (such as metal, wood, glass, or plastics) and immaterial (such as plans, or knowledge) in order to create output. Ideally this output will be a good or service which has value ...

productive efficiency In microeconomic theory, productive efficiency (or production efficiency) is a situation in which the economy or an economic system (e.g., bank, hospital, industry, country) operating within the constraints of current industrial technology canno ...

** total, average, and marginal product curves **

marginal productivity In economics and in particular neoclassical economics, the marginal product or marginal physical productivity of an input ( factor of production) is the change in output resulting from employing one more unit of a particular input (for instance, t ...

isoquant An isoquant (derived from quantity and the Greek word iso, meaning equal), in microeconomics, is a contour line drawn through the set of points at which the same quantity of output is produced while changing the quantities of two or more inputs. T ...

s &

isocost In economics, an isocost line shows all combinations of inputs which cost the same total amount.Chiang, Alpha C., ''Fundamental Methods of Mathematical Economics'', third edition, McGraw-Hill, 1984. Although similar to the budget constraint in co ...

s ** the

marginal rate of technical substitution In microeconomic theory, the marginal rate of technical substitution (MRTS)—or technical rate of substitution (TRS)—is the amount by which the quantity of one input has to be reduced (-\Delta x_2) when one extra unit of another input is used ( ...

Production function In economics, a production function gives the technological relation between quantities of physical inputs and quantities of output of goods. The production function is one of the key concepts of mainstream neoclassical theories, used to define ...

**inputs **

diminishing returns In economics, diminishing returns are the decrease in marginal (incremental) output of a production process as the amount of a single factor of production is incrementally increased, holding all other factors of production equal ( ceteris par ...

to inputs **the stages of production **shifts in a production function *

Economic rent In economics, economic rent is any payment (in the context of a market transaction) to the owner of a factor of production in excess of the cost needed to bring that factor into production. In classical economics, economic rent is any payment ...

** classical factor rents ** Paretian factor rents * Production possibility frontier ** what production levels are possible given a set of resources ** the trade-off between various input combinations ** the marginal rate of transformation Cost side of Industry: * Cost theory **Different types of

cost In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore. In business, the cost may be one of acquisition, in whic ...

s ***

***

accounting cost In accounting, an economic item's historical cost is the original nominal monetary value of that item. Historical cost accounting involves reporting assets and liabilities at their historical costs, which are not updated for changes in the items' v ...

or historical costs ***

transaction cost In economics and related disciplines, a transaction cost is a cost in making any economic trade when participating in a market. Oliver E. Williamson defines transaction costs as the costs of running an economic system of companies, and unlike p ...

***

sunk cost In economics and business decision-making, a sunk cost (also known as retrospective cost) is a cost that has already been incurred and cannot be recovered. Sunk costs are contrasted with '' prospective costs'', which are future costs that may b ...

***

marginal cost In economics, the marginal cost is the change in the total cost that arises when the quantity produced is incremented, the cost of producing additional quantity. In some contexts, it refers to an increment of one unit of output, and in others i ...

**The

line *

Cost-of-production theory of value In economics, the cost-of-production theory of value is the theory that the price of an object or condition is determined by the sum of the cost of the resources that went into making it. The cost can comprise any of the factors of production (incl ...

* Long-run cost and production functions ** long-run average cost **long-run production function and

efficiency Efficiency is the often measurable ability to avoid wasting materials, energy, efforts, money, and time in doing something or in producing a desired result. In a more general sense, it is the ability to do things well, successfully, and without ...

**returns to scale and isoclines **

minimum efficient scale In industrial organization, the minimum efficient scale (MES) or efficient scale of production is the lowest point where the plant (or firm) can produce such that its long run average costs are minimized. It is also the point at which the firm can ...

**plant capacity * Economies of density **

Economies of scale In microeconomics, economies of scale are the cost advantages that enterprises obtain due to their scale of operation, and are typically measured by the amount of output produced per unit of time. A decrease in cost per unit of output enables ...

***the efficiency consequences of increasing or decreasing the level of production. **

Economies of scope Economies of scope are "efficiencies formed by variety, not volume" (the latter concept is "economies of scale"). In economics, "economies" is synonymous with cost savings and "scope" is synonymous with broadening production/services through div ...

***the efficiency consequences of increasing or decreasing the number of different types of products produced, promoted, and distributed. **

Network effect In economics, a network effect (also called network externality or demand-side economies of scale) is the phenomenon by which the value or utility a user derives from a good or service depends on the number of users of compatible products. Net ...

***the effect that one user of a good or service has on the value of that product to other people. * Optimum factor allocation **

output elasticity In economics, output elasticity is the percentage change of output (GDP or production of a single firm) divided by the percentage change of an input. It is sometimes called ''partial output elasticity'' to clarify that it refers to the change of onl ...

of factor costs ** marginal revenue product **marginal resource cost *

Pricing Pricing is the process whereby a business sets the price at which it will sell its products and services, and may be part of the business's marketing plan. In setting prices, the business will take into account the price at which it could acqui ...

and various aspects of the pricing decision ** Transfer pricing ***selling within a multi-divisional company **

Joint product pricing In microeconomics, joint product pricing is the firm's problem of choosing prices for joint products, which are two or more products produced from the same process or operation, each considered to be of value. Pricing for joint products is more co ...

***price setting when two products are linked **

Price discrimination Price discrimination is a microeconomic pricing strategy where identical or largely similar goods or services are sold at different prices by the same provider in different markets. Price discrimination is distinguished from product different ...

***different prices to different buyers ***types of price discrimination **

Yield management Yield management is a variable pricing strategy, based on understanding, anticipating and influencing consumer behavior in order to maximize revenue or profits from a fixed, time-limited resource (such as airline seats or hotel room reservations ...

Price skimming Price skimming is a price setting strategy that a firm can employ when launching a product or service for the first time. By following this price skimming method and capturing the extra profit a firm is able to recoup its sunk costs quicker as we ...

***price discrimination over time ** Two-part tariffs ***charging a price composed of two parts, usually an initial fee and an ongoing fee **

Price points A price is the (usually not negative) quantity of payment or compensation given by one party to another in return for goods or services. In some situations, the price of production has a different name. If the product is a "good" in the c ...

***the effects of a non-linear demand curve on pricing **

Cost-plus pricing Cost-plus pricing is a pricing strategy by which the selling price of a product is determined by adding a specific fixed percentage (a " markup") to the product's unit cost. Essentially, the markup percentage is a method of generating a particular ...

***a markup is applied to a cost term in order to calculate price *** cost-plus pricing with elasticity considerations ***cost plus pricing is often used along with break even analysis ** Rate of return pricing *** calculate price based on the required rate of return on investment, or rate of return on sales *

Profit maximization In economics, profit maximization is the short run or long run process by which a firm may determine the price, input and output levels that will lead to the highest possible total profit (or just profit in short). In neoclassical economics, w ...

**determining the optimum price and quantity **the totals approach **marginal approach of production

People

Antoine Augustin Cournot Antoine Augustin Cournot (; 28 August 180131 March 1877) was a French philosopher and mathematician who also contributed to the development of economics. Biography Antoine Augustin Cournot was born at Gray, Haute-Saône. In 1821 he entered ...

* Heinrich Freiherr von Stackelberg *

Jean Tirole Jean Tirole (born 9 August 1953) is a French professor of economics at Toulouse 1 Capitole University. He focuses on industrial organization, game theory, banking and finance, and economics and psychology. In 2014 he was awarded the Nobel Mem ...

Joseph Bertrand Joseph Louis François Bertrand (; 11 March 1822 – 5 April 1900) was a French mathematician who worked in the fields of number theory, differential geometry, probability theory, economics and thermodynamics. Biography Joseph Bertrand was ...

William Baumol William Jack Baumol (February 26, 1922 – May 4, 2017) was an American economist. He was a professor of economics at New York University, Academic Director of the Berkley Center for Entrepreneurship and Innovation, and Professor Emeritus at Prin ...

External links

Industrial Organization Society
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Pricing Production economics

Overview

Concepts

People

See also

External links