Industrial organization

branch of economics
For other use of the term, see organization of industry.

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 perfectly competitive model, complications such as transaction costs.


  • The rise of the modern corporation has brought a concentration of economic power which can compete on equal terms with the modern state - economic power versus political power, each strong in its own field. The state seeks in some aspects to regulate the corporation, while the corporation, steadily becoming more powerful, makes every effort to avoid such regulation... The future may see the economic organism, now typified by the corporation, not only on an equal plane with the state, but possibly even superseding it as the dominant form of social organization. The law of corporations, accordingly, might well be considered as a potential constitutional law for the new economic state, while business practice is increasingly assuming the aspect of economic statesmanship.
  • In the late 1930s, E.S. Mason wrote a series of papers which established the research programme which became industrial organisation. Many of these papers discussed the lessons for antitrust policy from the Robinson/ Chamberlin revolution. Although these papers made some proposals for a strengthening of antimonopoly measures, it is clear that there is a decisive break between the emerging Harvard school the old J.B. Clark/ Marshallian preoccupation with freedom and openness of competition, which Mason refers to as "antiquated and inadequate."

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