Industrial economics

This book is intended as a text for advanced undergraduates and graduate students specialising in industrial economics. It gives a comprehensive review of recent theoretical and empirical works, emphasising the need to relate the two in a subject where they have often been separated. Part One introduces the subject and traces its intellectual ancestry in academic economics. Part Two, the Analysis of Markets, discusses the various elements of market structure, and their relation to the pricing behaviour and profitability of firms. Part Three, the Behaviour of Firms, stresses the actions taken by firms to relax the constraints on profitability imposed by markets. The exposition of the modern theory on the goals and growth of firms provides a frame work for analysis of the financial and expenditure, decisions of the firm. Investment, advertising, research and development and acquisition by merger are given separate consideration. Part Three ends by assessing the impact of firms' activities on market and industrial concentration over time. Part Four, the Issues for Public Policy, discusses the implications of market structure and firm behaviour for resource allocation, and examines the role of government intervention.

The particular innovation of the text is the integration of traditional analysis of the effect of market structure on performance with analysis of the behaviour of large diversified firms that act to change market structures over time. Also new are the exposition of the theory of growth of the firm, the detailed discussion of goals, the treatment of finance and investment, and the consideration of optimal resource allo cation under uncertainty. Major new surveys of empirical work are provided in summing up Parts II and III.