ABSTRACT
This chapter discusses that the focus of neoclassical perfect competition and industrial organisation theories has been on 'market structure'. Elaboration within Industrial Organisation, while extending the theory to new market situations, retains the basic framework and decision-making process postulated for perfect competition. Within the neoclassical construct the basic argument was that the particular market structure of the economy will influence the pattern of resource allocation. The neoclassical research has shed much light on how markets look, but it has not shown exactly how markets work. The Austrian and evolutionary schools of thought approach the market phenomena from the perspective of how the market functions, not on how it is organised. The chapter examines the Austrian and the evolutionary theories respectively from the standpoint of their foundational offerings to strategic management approach to explain the differential and competitive economics of market participants, namely, firms.
