Industrial Organization

Theory and Applications

ISBN: 9780262283625 | Copyright 1996

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This upper-level undergraduate text provides an introduction to industrial organization theory along with applications and nontechnical analyses of the legal system and antitrust laws. Using the modern approach but without emphasizing the mathematical generality inherent in many of the arguments, it bridges the gap between existing nontheoretical texts written for undergraduates and highly technical texts written for graduate students. The book can also be used in masters' programs, and advanced graduate students will find it a convenient guide to modern industrial organization.The treatment is rigorous and comprehensive. A wide range of models of all widely used market structures, strategic marketing devices, compatibility and standards, advertising, R&D, as well as more traditional topics are considered in versions much simplified from the originals but that retain the basic intuition.

Shy first defines the issues that industrial organization addresses and then develops the tools needed to attack the basic questions. He begins with perfect competition and then considers imperfectly competitive market structures including a wide variety of monopolies, and all forms of quantity and price competitions. The last chapter provides a helpful feature for students by showing how various theories may be related to particular industries but not to others.

Topics include: the basics needed to understand modern industrial organization; market structure (monopoly, homogenous products, differentiated products); mergers and entry; research and development; economics of compatibility and standards; advertising; quality and durability; pricing tactics; marketing tactics; management, compensation, and information; price dispersion and search theory; and special industries.

At last, an IO textbook for undergraduates (and beginning graduate students as well) which utilizes game-theoretic analysis throughout but relies on easily digested examples. I look forward to trying it out on my students.

Stephen Salant Professor of Economics, University of Michigan

This book presents the main ideas of modern industrial organization, many of which are explained without using calculus. Only the ability to follow logical arguments is needed for these sections. Oz Shy also provides a very nice introduction to topics which are typically not covered in other texts, namely the basic results about compatibility and the choice of standards as well as a concise analysis of specific industries.

Jacques Thisse Professor of Economics at the Sorbonne and CERAS, Paris
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Contents (pg. vii)
Figures (pg. xiii)
Preface (pg. xvii)
Chapter 1: Introduction (pg. 1)
Part I: Theoretical Background (pg. 9)
Chapter 2: Basic Concepts in Noncooperative Game Theory (pg. 11)
Chapter 3: Technology, Production Cost, and Demand (pg. 43)
Part II: Market Structures and Organization (pg. 57)
Chapter 4: Perfect Competition (pg. 63)
Chapter 5: The Monopoly (pg. 71)
Chapter 6: Markets for Homogeneous Products (pg. 97)
Chapter 7: Markets for Differentiated Products (pg. 133)
Chapter 8: Concentration, Mergers, and Entry Barriers (pg. 169)
Part III: Technology and Market Structure (pg. 219)
Chapter 9: Research and Development (pg. 221)
Chapter 10: The Economics of Compatibility and Standards (pg. 253)
Part IV: Marketing (pg. 279)
Chapter 11: Advertising (pg. 281)
Chapter 12: Quality, Durability, and Warranties (pg. 307)
Chapter 13: Pricing Tactics (pg. 341)
Chapter 14: Marketing Tactics (pg. 361)
Part V: The Role of Information (pg. 393)
Chapter 15: Monitoring, Management, Compensation, and Regulation (pg. 395)
Chapter 16: Price Dispersion and Search Theory (pg. 421)
Part VI: Selected Industries (pg. 435)
Chapter 17: Miscellaneous Industries (pg. 437)
Index (pg. 459)
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