ABSTRACT

Industrial organization is an applied field of microeconomics; its main task is to conduct empirical testing of the resource allocating function of the price mechanism and to clarify its policy implications. It covers not only organization of individual industries but also issues of public policy, so that it is difficult to draw a well-defined boundary between it and other fields of economics. At the time theory of industrial organization was transplanted into Japan, active interfirm competition broke out in major Japanese industries, particularly chemical and heavy industries. The competitive stimulus helped Japanese industries to improve themselves and to reinforce their international competitiveness. Analysis of small business in Japan belongs to a field separate from that of industrial organization. It has been developed on its own and with its own problems. Theory of industrial organization is most effective in industry studies in which interrelations between market structure, market behavior, and market performance are examined.