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 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 rel ...
.
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 analyzes ...
that studies:
** the
strategic behavior of
firms
** the structure of
market
Market is a term used to describe concepts such as:
*Market (economics), system in which parties engage in transactions according to supply and demand
*Market economy
*Marketplace, a physical marketplace or public market
Geography
*Märket, an ...
s
***
Perfect competition
***
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
***
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 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 situation where a speci ...
***
Monopsony
In economics, a monopsony is a market structure in which a single buyer substantially controls the market as the major purchaser of goods and services offered by many would-be sellers. The microeconomic theory of monopsony assumes a single entity ...
** 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 a ...
**
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 ...
**
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 rel ...
** 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. ...
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 con ...
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 parib ...
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 m ...
**
classical factor rents
**
Paretian factor rents
*
Production possibility frontier
Production may refer to:
Economics and business
* Production (economics)
* Production, the act of manufacturing goods
* Production, in the outline of industrial organization, the act of making products (goods and services)
* Production as a stati ...
** what production levels are possible given a set of resources
** the trade-off between various input combinations
** the
marginal rate of transformation
Marginal may refer to:
* ''Marginal'' (album), the third album of the Belgian rock band Dead Man Ray, released in 2001
* ''Marginal'' (manga)
* '' El Marginal'', Argentine TV series
* Marginal seat or marginal constituency or marginal, in polit ...
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
***
opportunity cost
***
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' ...
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 pro ...
***
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 be ...
***
marginal cost
**The
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 con ...
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 In economics, the long-run is a theoretical concept in which all markets are in economic equilibrium, equilibrium, and all prices and quantities have fully adjusted and are in equilibrium. The long-run contrasts with the short-run, in which there ar ...
**
long-run average cost
**long-run production function and
efficiency
**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 In microeconomics, economies of density are cost savings resulting from spatial proximity of suppliers or providers. Typically higher population densities allow synergies in service provision leading to lower unit costs. If large economies of densit ...
**
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
Mathematical optimization (alternatively spelled ''optimisation'') or mathematical programming is the selection of a best element, with regard to some criterion, from some set of available alternatives. It is generally divided into two subfi ...
**
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 may refer to:
* ''Marginal'' (album), the third album of the Belgian rock band Dead Man Ray, released in 2001
* ''Marginal'' (manga)
* '' El Marginal'', Argentine TV series
* Marginal seat or marginal constituency or marginal, in polit ...
**marginal resource cost
*
Pricing and various aspects of the pricing decision
**
Transfer pricing
In taxation and accounting, transfer pricing refers to the rules and methods for pricing transactions within and between enterprises under common ownership or control. Because of the potential for cross-border controlled transactions to distort ...
***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 differe ...
***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 w ...
***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 ...
***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 a pricing strategies, pricing strategy by which the selling price of a product is determined by adding a specific fixed percentage (a "markup (business), markup") to the product's unit cost. Essentially, the markup percentage i ...
***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
**determining the optimum price and quantity
**the totals approach
**marginal approach of production
People
*
Antoine Augustin Cournot
*
Heinrich Freiherr von Stackelberg
Heinrich Freiherr von Stackelberg (October 31, 1905 – October 12, 1946) was a Nazi economist who contributed to game theory and industrial organization and is known for the Stackelberg leadership model.
Stackelberg became a member of the Naz ...
*
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 Memor ...
*
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 ...
See also
External links
Industrial Organization Society
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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 ...
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 ...
Pricing
Production economics