Industrial Organisation

Industrial Organization studies the strategic behavior of firms in the market with respect to production, pricing, employment and other choices. One of its main foci is to understand why markets are not perfectly competitive, and what the interaction is between market structure and  a firm’s behavior. Imperfect competition (such as monopoly or oligopoly) is usually associated with the presence of transaction costs, barriers to entry, or limited and asymmetric information. Typical examples of  a firm’s strategic behavior in the market include: price discrimination, product differentiation, collusion and advertising as signalling. As imperfect competition is related to a welfare loss, an important topic in industrial organization concerns the role of public policy, in terms of economic regulation, contract enforcement, competition policy and antitrust laws.