ABSTRACT
This chapter provides a brief overview to the historical development of the industrial organization economics field of research and focuses on the work that has related industrial organization to the supply chain. It describes the strong division of the field into two main schools of thought, namely the Chicago School and the structure-conduct-performance school. The chapter discusses some fundamental principles relevant for understanding industrial organization concepts including: market structure, firm conduct and market performance. It highlights that those models that have merged the supply chain concept and the industrial organization methodology. Industrial organization economics and microeconomics, another branch of economics sometimes termed price theory, are quite similar in subject matter. The structure-conduct-performance school ‘argued that the private exercise of monopoly power is a persistent feature of many markets’. Market structure determines the behaviour of firms in the market and the behaviour of firms determines the various aspects of market performance.
