Lecture3-SCP 上海交大产业组织实务课件.pdf

Structure-Conduct-Performance Empirical IO: Lecture 3 Chun-Yu Ho, SJTU 1 Introduction • The Structure, Conduct Performance Model (Mason, 1939) – Identify causal links from market structure to firm conduct which in turn determine market performance – Look for a stable causal relationship that would hold across industries Structure Conduct Performance Concentration Pricing Efficiency Entry Barrier Advertising Technical Progress Product Differentiation RD Government Policy Antitrust Regulation 2 Introduction • Structure – Concentration: Oligopoly theory postulates that higher concentration lead to higher price and profit – Barriers to entry: Allow existing firms to charge prices above the competitive level without attract entry – Product differentiation: Allow existing firms to charge prices above the competitive level without losing customers to competitors • Conduct – Firm decisions on price, quantity, advertising, capacity, RD, … – Two extreme states: Competition and collusion (explicit and tacit) – Explicit collusion requires communication among firms, whereas firms achieve some mutual understanding without explicit communication in tacit collusion 3 Introduction • Performance – Efficiency (Consumer surplus + profit) – Technical progress: More cost-efficient production method and better