Archives: November2009

• Interactions

  The linear structure-conduct-performance model depicted in Figure 1 -1 presumes very simple causal relationship. Structure determines conduct, conduct determines performance, and it’s time to go home. But it is evident from our brief discussion of the structure-conduct-performance model that industrial relationships are not so simple. The linear structure-conduct-performance model has been augmented to reflect the [...]

• Profitability – Efficiency – Progressiveness

  Profitability
  Under competition, firms are able to earn only a normal rate of return on their investment. Monopoly profit-profit above the normal rate of return-is the reason why firms seek to acquire and maintain market power. The closer is profit to the normal rate of return, the less is output restricted below the competitive level, the [...]

• Strategic Behavior

  In some kinds of markets, established producers may be able to discourage the entry of new firms. They can do so by holding down the price, so that entry is less attractive. This works to the disadvantage only of less efficient firm and gives society the benefit if lower prices. This sort of rivalry is [...]