ABSTRACT
In this chapter, the authors show that industrial organization economists must make use of the best data available. They look at market structure. Several statistical measures of seller concentration within an individual market are available. Consequently, antitrust authorities who worry about “competitiveness” often look first at the structure of specific markets, examining how closely a given structure resembles the structure of a perfectly competitive market. Aggregate concentration statistics measure the role played by large companies such as Exxon Mobil in the economy as a whole rather than measuring the extent to which, for example, Kellogg’s dominates the breakfast cereal industry. Incentives to exit from an industry can be viewed as another side of incentives to enter. Economists recognize that entry decisions depend on incentives as well as barriers. Bain basically considered structural barriers to entry, barriers related to structural or technical characteristics of an industry.
