Industrial Organization: Some Applications for Managerial Decisions

Abstract

performance of the market (P), or S -C-P, is a useful framework for understanding how markets and industries work. It has long been the basis of policy prescriptions for noncompetitive industries. However, dissatisfaction has arisen over the applicability of IO research findings to private, firm-level problems (Padberg and Westgren 1983). Also, a number of papers (Handy and Padberg, Padberg, Padberg and Westgren 1979, Shaffer) have appeared in this Journal during the past two decades which question the use of the IO paradigm for evaluating food system performance and its applicability to more complex seller-consumer interactions. Over the same period, several papers have been published in the Journal which rely on pure industrial organization (Parker and Connor, Connor 1981, Marion 1979), though their emphasis is largely on public policy implications. In this paper I argue that the IO paradigm is a useful framework for private as well as public decision makers. I address some criticisms of the IO paradigm, identify some examples of recent research which have direct private sector applicability, and suggest some areas for further research.