What is the industrial organization viewpoint of competition?

Question

What will be an ideal response?

Answer 1

Essentially, the study of industrial organization (IO) focuses on three variables: market structure, market conduct, and market performance. The essence of IO framework is that a firm’s success in the marketplace depends critically on the characteristics of the industry environment in which it competes. The industry environment comprises structure, conduct, and performance.
Market or industry structure refers to economic and technical perspectives of the industry in the context of which competition occurs. Structure includes:
(a) concentration in the industry (i.e., the number and size distribution of firms);
(b) barriers to entry in the industry; and
(c) product differentiation among the offerings of different firms comprising the industry.
Conduct refers to firms’ behavior decisions in matters such as pricing, advertising, distribution, etc. Viewed in terms of strategy, conduct could be contrived to mean firm’s strategy.
Performance is defined broadly to include social performance, measured in terms of allocative efficiency (profitability), technical efficiency (cost minimization), and innovativeness.