Industrial organization theory is a relatively independent economic discipline developed from microeconomics, and microeconomics is its theoretical basis. However, although industrial organization is a practical economic discipline, it has formed its own theory and method in the development process of nearly 10 years and has become a fairly theoretical discipline. (Note: See Tirole, J., 1988, Theory of Industrial Organization, Cambridge, Massachusetts: MIT Press, pp. 1 ~ 10. For Chinese translation, please refer to J. Taylor, Zhang Yi, 1997, Theory of Industrial Organization, Beijing: Renmin University of China Press, pp.1~ 20. The mainstream economic circles have basically the same views on the subject scope of industrial histology. 1996, Oxford University Press published the Essays on Industrial Histology edited by Anidya Sen, which included 19 representative works in the field of industrial histology. Sen pointed out in the introduction: "The definition of industrial histology (IO) can be broader. (Note: See Sen, A., 1996, Introduction to Industrial Organization, 1 [ST] ed. Delhi: Oxford University Press. To put it simply, industrial economics takes markets and enterprises as research objects, and studies enterprise behavior or market structure from the perspective of markets.
In the west, the development of industrial organization theory not only perfects its own theoretical system, but also affects the emergence and development of other economic disciplines. For example, regulatory economics is developed on the basis of industrial organization theory, and some applied microeconomics disciplines, such as labor economics, international trade, comparative economic system, etc., have also benefited a lot from the development of industrial economics. In addition, marketing, corporate governance structure and other business administration disciplines more related to industrial economics. (Note: Readers who want to know more about this point can refer to Ma Guangqi's Development of Western Industrial Economics and Its Construction in China, Foreign Economy and Management,No. 10, 2000. )
First, the structuralist view of industrial organization theory
If traced back to the source, it is generally believed that A Marshall's neoclassical economics is the source of industrial organization theory, followed by P sraffa, Chamberlain and Joan J Robinson's monopoly competition theory in the first half of the 20th century. And J.M. Clark's "effective competition theory" all promoted the emergence of industrial organization theory, but the industrial organization theory at that time was still in its infancy. At present, the consistent view is that the theory of industrial organization, as a theoretical system, originated in the United States in the 1930s and has a history of 70 years. The emergence of industrial organization as an independent discipline is accompanied by the emergence of a large number of large manufacturing companies in the last century, which is inseparable from the failure of neoclassical microeconomic theory in explaining monopoly or imperfect competition.
The theoretical system of industrial organization was formed in the United States after 1930s, with Harvard University as the center and Mei Sen and J Bain as the representatives. Theoretical circles call it Harvard School. The main contribution of Harvard School is to establish a complete theoretical paradigm of SCP (note: SCP is the abbreviation of Structure-Conduct -performance). Harvard School believes that there is a causal relationship among structure, behavior and performance, that is, market structure determines enterprise behavior, and enterprise behavior determines the economic performance of market operation. Therefore, in order to achieve ideal market performance, the most important thing is through the public. The original form of this paradigm is Bain's (1956) two-stage paradigm of market structure and market performance. The publication of Bain's famous textbook On Industrial Organization (1959) marks the basic formation of industrial organization theory (Note: see Bain, J.S., 1959, Industrial Organization, new york: Harvard University Press; Bain company,
1956, New Competition Barriers, new york: Harvard University Press. ) and in the following 20 years, it became the main content of undergraduate and postgraduate courses in many famous foreign universities, affecting a whole generation of scholars and policy makers. The main research results of industrial organization theory at this stage are concentrated in the Essays on Industrial Organization and Public Policy edited by R.Heflebower and G.Stocking. As for the popular SCP syllogism paradigm in modern mainstream industrial organization theory, it was developed by scherer on the basis of Bain's two-stage theory (scherer published Industrial Market Structure and Market Performance in 1970). The formation of SCP paradigm marks the initial maturity of the theoretical system of industrial organization, so industrial organization has become a relatively independent economic discipline. At that time, Harvard University became the research center of industrial economics, and the industrial organization theory of Harvard School naturally became the mainstream school of industrial economics. However, the organizational theory of Harvard School has the nature of empiricism, which emphasizes empirical industrial research and lacks a solid theoretical foundation and systematic theoretical analysis. The structuralist view of Harvard School has had a great influence on the development and strengthening of anti-monopoly policies in western developed countries led by the United States after the war. Masao Machang, a famous Japanese authority on industrial organization theory, called his main theory "antitrust economics".
Second, the decline of SCP paradigm
Since 1960s, SCP paradigm has become a hot topic of discussion and criticism in theoretical and economic circles. These criticisms mainly come from economists of the University of Chicago, including stigler, Demsetz and Posner. It was in this critical process that the Chicago School rose and gradually gained the status of the mainstream school, with stigler as its representative. (Note: The Swedish Academy of Royal Sciences pointed out in the award announcement in stigler: "stigler has made great contributions to market operation research and industrial structure analysis, and its achievements have made it an academic leader in the research field of market and industrial structure application (industrial organization)". Quoted from Ma Guangqi, 2000, 10. The Chicago School has inherited the traditional economic liberalism and social Darwinism of the University of Chicago since F Knight, and holds that the process of market competition is the process in which market forces freely exert their functions and is a process of "survival test". (Note: For a review of the Chicago School's industrial organization theory, please refer to Xia Dawei's Western School of Industrial Organization: Methodology and Basic Views, which is contained in Li Yu's Theory and Problems of Industrial Economics, Economic Management Press, 2000, pp. 10 ~ 17, and Su Dongshui's third section of Chapter 4 of Industrial Economics. ) This school changed into neoclassical economic theory in theory, and firmly believed that Walras's theory of equilibrium and free competition was still valid, the behavior of manufacturers was its expected function, and the government did not need to intervene. 1966 stigler's representative work "industrial organization" (note: stigler, g.j., 1968, "industrial organization", Illinois: Irving Press. For the Chinese translation, see J. stigler, Pan Zhenmin, 1996. The publication of this book marks the theoretical maturity of Chicago School. This school pays special attention to the relationship between market structure and efficiency, rather than only the degree of competition as structuralists do, so it is called efficiency in theoretical circles.
In the process of the formation of Chicago School, scholars represented by Posner of University of Chicago Law School made special contributions. In cooperation with economists from the School of Economics and the School of Business, jurists have conducted in-depth research on the anti-monopoly law by using the price theory, which not only promoted the major transformation of the anti-monopoly policy in the United States, but also promoted the birth of a new marginal discipline-legal economics. Another important contribution of Chicago School to the study of industrial organization theory is the analysis of government industrial regulation by stigler, Demsetz and S. Pelcman. The result of this analysis is to create a new research field of economics-regulatory economics.
As a criticism of the traditional SCP paradigm, baumol (W.J.Baumol), Parn (J.C.Panzar) and R.D.Willig published "contestable market and Industrial Organization Theory" in 1982, which systematically expounded the so-called "competitive market theory". Based on the concepts of complete contestable market and sunk cost, this theory deduces the basic situation of sustainable and efficient industrial organization and its endogenous formation process, and strongly criticizes Bain's entry barrier theory, arguing that the problem is not whether there are entry barriers, but whether there are artificial entry barriers. This theory is in opposition to "Contextualism" put forward by baumol in 1980s. In terms of policy, this school advocates that the government's competition policy should pay more attention to whether there is enough potential competition pressure rather than market structure, and the key to ensure the existence of potential competition pressure is to reduce the sunk cost as much as possible. (Note: See the New palgrave Dictionary of Economics (Volume 2), edited by John Itwell, Economic Science Press, 1996, pp. 867-872. )
Like Harvard School, Chicago School has also had a far-reaching impact on the anti-monopoly activities and government control policies in the United States. Many economists of this school have held important positions in the Anti-monopoly Bureau of the Ministry of Justice, the Federal Trade Commission of the Reagan Administration and other important departments, and directly participated in the judicial practice of anti-monopoly business activities.
The decline of SCP paradigm is the result of many reasons. On the one hand, it lacks a profound and clear theoretical basis. It is precisely because the "old industrial organization" can not be well combined with the microeconomic theory generally accepted in the 1930s and lacks the ability to explain the growth and behavior of large enterprises and the increasingly prominent trend of industrial concentration that the position of SCP paradigm in the industrial organization theory has been declining in the late 1970s. (Noe: J Kabul: Introduction and Overview: Recent Development of Industrial Economics, edited by J Kabul (translated by Li Yu and Wang Xun), Frontier Issues of Industrial Economics, China Taxation Press, 2000, p. 4. On the other hand, people can't find a stable model relationship with universal significance in practice, which leads to contradictory interpretation of statistical results. There is also the wide application of game theory. The strategic behavior of enterprises in the market and the strategic behavior of internal agents provide a wide range of opportunities for the application of game theory. For example, Spencer, salop and Taylor all have important research results in this field, which indicates the development direction of industrial economics. (Note: See Spencer, A.M., 1977, Entry, Capacity, Investment and Olympic Pricing, Bell Journal.
Economics, vol. 8, pp. 534-544. Salop, south Carolina, 1979, strategy into deterrence, American economic review paper
And essays, vol. 69, pp. 358-335. Most importantly, the decline of SCP paradigm is the result of the rapid development of industrial organization theory.
Since 1970s, the research on industrial organization theory has attracted more and more attention and interest from world-class theoretical economists. They constantly join the ranks of research, which greatly makes up for the defect that the theoretical research of industrial organization mainly comes from empirical research and lacks theoretical basis. In particular, the application of game theory "makes industrial organization the most dynamic and exciting field in economics since the mid-1970s". (Note: J. Cabell's Introduction and Overview: Recent Development of Industrial Economics, edited by J. Cabell, Frontier Issues of Industrial Economics, page 2, for English version, see Cabell and John (ed. ), 1994, Industrial Economics, new york, Macmillan. After decades of development, western industrial organization theory has become a relatively independent microeconomics discipline with clear research object, rich content, complete system and strong application.
Third, the revision and development of industrial organization theory.
Since 1970s, due to the introduction of new theories and methods such as competitive market theory, transaction cost theory and game theory, the theoretical basis, analytical means and research focus of industrial organization theory have made substantial breakthroughs, which greatly promoted the development of industrial organization theory.
On the one hand, the development of industrial organization theory develops into a "new industrial organization" along the direction of SCP paradigm. The theory of new industrial organization no longer emphasizes market structure, but emphasizes market behavior. It regards the initial conditions of market and enterprise behavior as exogenous forces, while regards the market structure as endogenous variables, without feedback lines, and seeks to combine the industrial organization theory with neoclassical microeconomics more closely. In terms of research methods, around 1980s, economists represented by Taylor, Cripps and others introduced game theory into the research field of industrial organization theory, transformed the whole theoretical system of industrial organization with the analysis method of game theory, and gradually formed the theoretical system of "new industrial organization". The characteristics of new industrial organization theory can be summarized into three main aspects: from studying market structure to studying market behavior, that is, from "structuralism" to "behaviorism"; It breaks through the one-way and static research framework of traditional industrial organization theory and establishes a two-way and dynamic research framework. Introduction to game theory.
On the other hand, based on the transaction cost theory of R.H. Coase and others, the "new institutional industrial economics" which studies economic problems from the institutional perspective is also known as the "post-SCP school", and its representatives are Coase, North, O.E. Williamson, Archian and others. (Note: The achievements in this field are mainly reflected in the works of O.E. Williamson, see Williamson, O.E., 1985, The Economic System of Capitalism, new york: Free Press.
Williamson, O.E., 1989, Transaction Cost Economics, in Schmalensee R. and Willig, R.D. (Editor. Handbook of industrial organization, Amsterdam, North Netherlands: Elsevier Science Press. The main feature of this school's organizational theory is the introduction of transaction cost theory, which systematically expounds the theoretical system, basic assumptions, research methods and research scope of transaction cost economics, completely changing the traditional concept of investigating enterprises only from the perspective of technology and market only from the perspective of monopoly competition, providing a brand-new theoretical perspective for the study of enterprise behavior and directly promoting the deepening of industrial organization. If the mainstream industrial organization theory focuses on the relationship between industrial organizations, then the new institutional economics focuses on the interior of enterprises, and analyzes the variation of enterprise behavior and its influence on market performance from the changes of property rights structure and organizational structure within enterprises (companies).
The theoretical achievements of the new Austrian school of industrial organization are based on the traditional ideas and methods of the Austrian school of economics initiated by Meng Le and Eugen von Bonn Bavar. Neo-Austrian school pays attention to the logical analysis of individual behavior, and pays attention to process analysis rather than neoclassical equilibrium analysis when understanding the market. Its research goal is the nonlinear causal transmission from individual utility and behavior to price, rather than the mutual determination of well-known neoclassical mathematical functions. The difference in basic theory from Harvard School and Chicago School constitutes the most important feature of New Austrian School. Neo-classical school regards economics as an objective science through the analytical method of balanced criticism of the market, and imitates the analytical method of physics to construct an economic theoretical model. From the standpoint of subjectivism, they regard economics as a field of "human behavior science" different from natural science. They believe that the natural phenomena of natural science research objects usually have certain regularity, which can be expressed by mathematical models and verified by experiments. Economic laws are discovered by logical reasoning of some axioms that are self-evident, and historical facts are the comprehensive result of many factors, so it is difficult to test economic theories. Therefore, this school strongly denies modern mathematical methods as a tool for economic analysis, and advocates using the method of human behavior science to explain economic phenomena in language according to the axiom that human behavior is a reasonable behavior to achieve its goals. (Note: See Hayek, 1982, Hypocrisy of Knowledge, Selected Works of Modern Foreign Economics, 2nd Series, Beijing: Commercial Press. The industrial organization theory of neo-Austrian school is based on Knight's concept of uncertainty. Starting from incomplete information, the neo-Austrian school regards the competitive market process as the process of discovering and utilizing scattered knowledge and information, while the market imbalance is the loss of profit opportunities due to decision-making mistakes caused by undiscovered or incomplete information.
In terms of policy, the neo-Austrian school is basically critical of the traditional anti-monopoly policy of the Harvard school, strongly opposes government intervention, and thinks that government information is also incomplete. The anti-monopoly policy of Harvard School based on SCP analysis framework focuses on the formation and maintenance of competitive market structure, which is determined by market concentration, product differentiation and entry barriers. The New Austrian School believes that market competition stems from the innovative spirit of entrepreneurs. As long as the free access opportunity is guaranteed, enough competitive pressure can be formed, and the only barriers to entry are the government's access control policy and administrative monopoly. Therefore, the most effective policy to promote competition should first abolish those outdated regulatory policies and unnecessary administrative monopoly and implement laissez-faire policies. The New Austrian School believes that the improvement of social welfare stems from production efficiency, rather than allocation efficiency emphasized by Harvard School. As long as it doesn't rely on administrative intervention, monopoly enterprises are actually the most efficient enterprises that survive, which leads the New Olympics to adopt a tolerant attitude towards large-scale enterprise organizations, believing that the process of market competition is originally the process of eliminating inefficient enterprises, and opposing the structuralist policy proposition of enterprise division and prohibition of mergers. (Note: For further comments on the industrial organization theory of the Neo-Austrian School, please refer to the Theory and Problems of Industrial Economics, edited by Li, Economic Management Press, 2000, p. 17 ~ 23. )
The representative work of this stage is the Theory of Industrial Organization published by Taylor (France) in 1988, which is the most authoritative textbook of industrial organization in foreign universities in recent 10 years. In addition, 1987 published the first issue of Journal of Industrial Economics in the form of a special issue, 1990 Collected Papers on Industrial Organizations edited and published by Williamson, and 1994 Frontier Issues of Industrial Economics edited and published by Professor Cabel of the University of Wales, UK. These works include Classic Literature of Industrial Economics and New Industrial Organization.
Paying more attention to the study of the theoretical and policy implications of industrial organizations is also a new feature of its development. Looking through the literature on industrial organization in western academic circles in recent years, we can find that quite a few of them have discussed controversial issues in public economic policy, such as the relationship between merger and efficiency, predatory pricing, whether anti-monopoly law is conducive to competition and so on. (Note: See Hay, D., Morris, D., 199 1, Industrial Economics and Organization, 1 [at] ed, Oxford: Oxford University Press. )
Fourthly, the evolution of research methods and tools of western industrial organization theory.
The rapid development of industrial organization theory in the 20th century is mainly reflected in the great changes in its research methods. The change of analysis method has brought about the deepening and expansion of the theoretical research of industrial organization. Many innovations in industrial organization theory benefit from the evolution of research methods to a great extent, and the evolution of research methods even reflects the development of industrial economics in a certain sense. The research method of economics depends on its research content and object, and a single method cannot meet the needs of various fields. Therefore, the research methods of industrial economics are a collection of research methods, including empirical methods and normative analysis, qualitative analysis and quantitative analysis, static analysis and dynamic analysis, statistical analysis and comparative analysis, game analysis and structural analysis, system dynamics methods and so on.
Empirical method is the most basic analysis method of industrial organization theory, which occupies a core position in the methodology set of industrial organization. Empirical research is divided into two parts: theoretical research and empirical research. As far as methodology is concerned, industrial economics is also an applied economics with a strong color of normative economics. In the research and analysis of related theories, its related judgments or conclusions are based on certain values.
The empirical laws in industrial organizations are mostly the result of the comprehensive application of static and dynamic analysis methods. Static analysis is usually called cross-sectional analysis. Although static analysis is generally the starting point and foundation of dynamic analysis, industrial organization research mainly focuses on dynamic analysis and time series analysis. Many research results of industrial organizations are summarized through a lot of statistical analysis. It is necessary to summarize the general laws by statistical analysis. When studying the industrial problems of specific countries, it is often necessary to compare them with the industrial conditions of corresponding countries or regions by comparative analysis.
Structuralism attaches great importance to industrial structure and market structure, and thinks that the behavior of the system is determined by the structure of the system, so it attaches great importance to the relationship structure between industries and the interaction between enterprises in the industry, and studies the overall behavior of the whole industry from this structure.
System dynamics method is a theory to study the overall behavior of the whole system by analyzing the feedback structure relationship between variables in the social and economic system. System dynamics thinks that the behavior of the system is determined by the structure of the system, which is consistent with the structural analysis method. System dynamics further points out that the structure of the system is a dynamic feedback structure and can be studied by cybernetics. Therefore, system dynamics pays special attention to the dynamic feedback structure between economic variables, but does not require high accuracy of variables, so it is especially suitable for the study of complex systems such as industrial economy, which are difficult to quantify in many aspects. Many foreign scholars have studied many industrial economic objects, such as industrial organization and industrial structure, with the method of system dynamics, and achieved satisfactory results.
From the time point of view, case analysis is the most important research method of industrial economics in 1950s, which was widely adopted by Harvard School and Chicago School, and achieved many significant research results. Case method is especially suitable for complex economic cases that cannot be accurately and quantitatively analyzed, which is very helpful to reveal the different manifestations of universal economic laws in different realistic environments and to cultivate the sensitivity of economic researchers to the economic laws contained in actual economic affairs.
After 1960s, econometric method became the main research method of industrial economics, which was adopted after industrial economics was transformed into empirical research, and it is still the main empirical research method. In the middle and late 1960s, with the emergence of a new generation of well-trained (or hastily armed) scholars in econometric methods and the rapid popularization of electronic computers and econometric software, regression analysis using cross-sectional data of structure-performance model has almost become the fashion of industrial organization research. (Noe: J. Kabur's Introduction and Overview: Recent Development of Industrial Economics, edited by J. Kabur, Frontier Issues of Industrial Economics, China Taxation Press, 2000, p. 3. In a word, the basic idea of this period is to establish and verify the SCP paradigm and its internal logical relationship by using case analysis and quantitative analysis.
The application of verb (verb's abbreviation) game theory in industrial organization theory
Industrial organization theory is an early application of game theory, especially in the fields of oligopoly, imperfect competition market pricing, enterprise merger, anti-monopoly regulation and so on. Game theory is the main research method of industrial economics after 1970s. It can be said that the great theoretical progress of industrial organization economics in the past few years is due to the wide application of game theory. At the same time, the application of game theory, mechanism design and incomplete contract theory has greatly strengthened the theoretical basis of industrial organization economics. If econometric methods are mainly suitable for empirical research, then game theory methods are mainly suitable for theoretical analysis. In 1980s, western scholars, represented by French scholar Taylor, used game theory to reconstruct the whole theoretical system of industrial organization. Game theory is introduced into the analysis of industrial economic theory, which means that the Walras equilibrium, which used to be realized only by the market, can now be solved by adjusting the internal structure of the organization. The school of rational expectation provides theoretical support for this objective fact. Enterprise behavior depends not only on the market structure, but also on the expectation of other enterprises' reaction behavior that may be caused by their own behavior, that is, the behavior of enterprises is a function of their psychological expectations. From the perspective of game theory, the behavior of an enterprise is a function of the information structure or judgment probability owned by all enterprises. These breakthroughs make the industrial organization theory more explanatory to the behavior of manufacturers in the real economy.
Now game theory has become a dominant research tool in industrial organization research, and it is often used to study oligopoly, incomplete market pricing, enterprise merger, anti-monopoly regulation and other issues. It is precisely because of the application of game theory that industrial economics has become one of the fastest growing fields in economics and attracted a large number of first-class economists to participate in it. "We began to find a theoretical method to deal with some aspects of colorful behaviors ... We now have a theoretical model that can explain various phenomena from strategic behaviors and information. These phenomena include: price war, false advertising, restrictive pricing, tacit cooperation and collusion, broken bargaining and agreement delay, the role of guarantee and service contracts, pricing methods chosen by oligopoly enterprises, the nature of contracts between suppliers and customers, and the adoption of various trading systems. (Note: Roberts, D.J., 1987, "Competition for Market Share: Radical Pricing with Incomplete Information".
And competitive dynamics, in Piraeus, T. ), Progress of Economic Theory, Fifth World Congress, Cambridge: Cambridge.
University Press, page 157. )
However, some people look at this problem from another angle. Scherer believes that "the achievements of' new industrial economics' have been greatly overestimated ... Now it is generally believed that we need to take solid empirical research as the basis, including both qualitative and quantitative aspects ...". (Note: scherer, F.M., 1988, Economics of Market Dominance, Basil Blackwell: Oxford, in.
Journal of International Industrial Organizations, No.6, pp.517 ~ 518. ) Schmalensee agrees with this view: our understanding of many classic issues, including entry barriers and cartel stability, has been greatly improved. But at the same time, we should also see two shortcomings of game theory in analyzing imperfect competition: First, under the condition of incomplete information, there are many refined Bayesian Nash equilibria even in simple multi-stage games, but the general method of how to deal with refined Bayesian Nash equilibria is not clear, assuming that people with limited rationality can solve the complex multi-stage game problems faced in real life seems to push the rational principle too far; Secondly, the multiple equilibrium results of the widely used non-cooperative game model are very sensitive to the subtle changes of assumptions, which makes the equilibrium very fragile and it is very difficult to test the game model. The prediction of game model looks subtle, but it is often difficult to test, so unless the game theory analysis can yield a convincing general prediction or be replaced by other theories that can do this, it should be believed that the most important achievements of industrial economics mainly come from empirical research, and only empirical research can reveal which theoretical models are "empty" (Note: Schmalensee, 1988, Industrial Economics: An Overview) In this way, since the 1990s, the theory of industrial organization has entered a new period of rapid development. "Industrial organizers have turned to empirical research to resolve differences, fill loopholes and refine ideas" (Noe: J Kabul's Introduction and Overview: Recent Development of Industrial Economics, edited by J Kabul, Frontier Issues of Industrial Economics, China Taxation Press, 2000, p. 7. ), the obvious distinction between theoretical researchers and empirical researchers has disappeared in the past, and empirical researchers are more and more willing to absorb and apply the new achievements of economic theory and econometric methods. As a whole, the technology and means of empirical research have reached a higher level, theoretical researchers are more in touch with reality than in the past, and actual data are more accurate and easier to obtain. Therefore, with the extensive attention of game theory at the theoretical level, the case study method continues to be favored and its importance is relatively improved, but the cross-sectional regression analysis has declined. (Noe: J. Kabur's Introduction and Overview: Recent Development of Industrial Economics, in J. Kabur's Frontier Issues of Industrial Economics, China Taxation Press, 2000, p.1/. In addition to the non-cooperative game theory will still play a major role in the theory of industrial organization, online games and cooperative-non-cooperative mixed games will increasingly penetrate into the analysis of industrial organizations.
In 1980s, Plott's experimental method was greatly developed and widely used in macro.