Published by MBA Skool Team, Last Updated: April 04, 2016
What is Industrial Organization?
Industrial organization is a field of study in finance economics which gives a relation between firms, businesses and markets. It throws light upon various aspects of a business for a firm by considering real-life scenarios as well as information related to competition, market scenario, barriers, business costs etc.
The study of Industrial Organization is built on the theory about firm attempts to predict the nature of a firm in terms of its existence, behavior and its relationship with the market. It adds a new dimension to the perfectly competitive world complicating it further by introducing factors such as transaction costs , limited information, barriers to entry of new firms which are generally associated with imperfect competition. The study analyzes the various determinants of firm and market organization and their behavior as reflected between competition and monopoly which also includes government actions.
The study can have various approaches. It can play the role of a microeconomic model which can explain the internal firm organization and market strategy, including internal research and development. Another approach could be towards the economic policy so as to describe the economic regulations, antitrust laws and towards the economic governance of law which defines the property rights, enforcement of contracts and providing organizational infrastructure.
In 1972, the Industrial Organization society was formed which helps in understanding this field better. The IOS was founded by Willard Mueller and Stanley Boyle.
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