imagesIndustrial Economics

Industrial economics through much of its development was a dialogue between groups of researchers between different world views. The structure-conduct-performance school believed that elementary price theory was often inadequate to explain real-world events and that observation should guide the development of models sophisticated enough to explain the real world. The Chicago school believed that contradiction between the prediction of elementary price theory and observation of the real world should be explained by assuming that the observation were in error.

Those of you who reach the end of this book will learn that research in industrial economics has been rather contentions. This history is largely a result of the fact that research industrial economics has been a long conversation in which participants talked past each other rather than to each other.

This failure to communicate is less to day than was one the case. By and large, the two school industrial economics maintain policy positions that are as distinct as ever. But there has been a convergence of methodology, creating to some extent a synthesis between to the school.

Much current research, which clearly has its roots in the structure-conduct-performance framework, has assumed a distinctly theoretical ton. There are two main reasons for this development.