Market Structures in Production Economics

Abstract

Our chapter begins by discussing the structure-conduct-performance (SCP) paradigm, which is an early descriptive literature that provided many of the stylized facts about market behaviors. This is followed by a discussion of the bounds approach, which concentrates on making predictions that can hold across a broad range of industries and is achieved by aiming conclusions based on minimal assumptions. We then briefly talk about commonly used fundamental market structures and illustrate how different combinations of various standard concepts are combined to describe market structures. As dynamic en and markets with product differentiation play important roles in defining market structures, we provide additional information about models with dynamic environments and models with product differentiation in separate sections. We finalize our review by discussing in depth the literature on market structure on innovation, productivity slowdowns and related problems of income inequality.