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Unformatted text preview: What is Industrial Organization? Chapter 1 Evrim Dener SMU (SMU) 1 / 13 Industrial Organization Industry: Any large-scale business activity Steel Tourism Manufacturing Industrial Organization: Study of Firm behavior The structure of markets The implications on the welfare of consumers, producers, and e ciency. (SMU) 2 / 13 An Example: Zantac by GLAXO-WELLCOME Zantac is a well-known ulcer and heartburn medicine produced by GLAXO-WELLCOME: has a low production cost is sold at a high price has a high market share Why is GLAXO-WELLCOME able to increase prices without losing signi&cantly market share? Why have not other &rms imitated it? (SMU) 3 / 13 An Example: Zantac by GLAXO-WELLCOME NOVOPHARM has won the permission to produce a Generic version (chemically equivalent) of Zantac: 30 tablet box of 300 mg. Zantac p=85.95 250 tablet box of 300 mg. Generic p=95 Zantac still enjoys a large market share. Why isnt competition more intense?...
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- Spring '08