Structure, conduct, policy, and performance: the "simple model" of Frederic M. Scherer

Journal title ECONOMIA E POLITICA INDUSTRIALE
Author/s John Kwoka
Publishing Year 2014 Issue 2014/1
Language English Pages 21 P. 137-157 File size 285 KB
DOI 10.3280/POLI2014-001008
DOI is like a bar code for intellectual property: to have more infomation click here

Below, you can see the article first page

If you want to buy this article in PDF format, you can do it, following the instructions to buy download credits

Article preview

FrancoAngeli is member of Publishers International Linking Association, Inc (PILA), a not-for-profit association which run the CrossRef service enabling links to and from online scholarly content.

Prominent among F.M. Scherer’s many contributions to industrial economics and policy has been the analytical framework set out in his Industrial Market Structure and Economic Performance, first published in 1970 (Scherer, 1970). At the outset of that book, Scherer described what he termed a "simple model" of the relationship between underlying conditions, market structure, firm behavior, and economic performance. This essay makes clear that Scherer’s model was anything but simple: this model offered a unifying framework to a vast body of literature; it provided explicit causal - sometimes complex - linkages between its stages; and it had, and has continued to have, implications for competition policy across several decades. After discussion of the components of Scherer’s model, some of its implications are developed. These include the Horizontal Merger Guidelines, which reflect an emphasis on market structure together with a recognition of the importance of other considerations, and also remedies policies toward companies violating antitrust laws. Scherer’s co-authored brief on the Microsoft antitrust case is examined for its careful application of the "simple model" to a complex policy setting.

Keywords: Market structure, antitrust remedies, merger guidelines

Jel codes: L1, L4

  1. Averch H., Johnson L. 1962. Behavior of the firm under regulatory constraint. American Economic Review, 52 (5): 1053-1069.
  2. Church J., Ware R. 2000. Industrial Organization: A Strategic Approach. McGraw-Hill: New York.
  3. Department of Justice. 2004. Antitrust Division Policy Guide to Merger Remedies. United States Department of Justice Antitrust Division: Washington.
  4. Department of Justice. 2011. Antitrust Division Policy Guide to Merger Remedies. United States Department of Justice Antitrust Division: Washington.
  5. Elzinga K. 1969. The antimerger law: pyrrhic victories?. Journal of Law & Economics, 12 (1): 43-78, DOI: 10.1086/466659
  6. Federal Trade Commission. 1999. A Study of the Commission’s Divestiture Policy. United States Federal Trade Commission: Washington.
  7. Friedman M. 1970. The social responsibility of business is to increase its profits. New York Times Magazine, September 13.
  8. Gavil A., First H. Forthcoming. Microsoft and the Globalization of Competition Policy: A Study in Antitrust Institutions. MIT Press: Cambridge (Mass.).
  9. Goldschmid H., Mann H.M., Weston J.F. 1974. Industrial Market Structure and Economic Performance. Little Brown: Boston.
  10. Jensen M., MecklingW. 1976. Theory of the firm: managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3 (4): 305-360, DOI: 10.1016/0304-405X(76)90026-X
  11. Kwoka J. 2007a. Frederic M. Scherer, in de Jong H.W., Shepherd W.G. (eds.) Pioneers of Industrial Organization. Edward Elgar Publishing: Cheltenham.
  12. Kwoka J. 2007b. Exhibit A to Plaintiff States’ Motion to Extend the Modified Final Judgment Until November 12, 2012, State of New York et al. v. Microsoft Corporation, Civil Action 98-1233, unpublished.
  13. Kwoka J., Moss D. 2012. Behavioral merger remedies: evaluation and implications for antitrust enforcement. Antitrust Bulletin, 57 (4): 979.
  14. Litan R., Noll R., Nordhaus W., Scherer F.M. 2000. Remedies Brief of Amici Curiae, US. v. Microsoft, published online.
  15. Motta M. 2004. Competition Policy: Theory and Practice. Cambridge University Press: Cambridge (UK).
  16. Rubinfeld D. 2013. Maintenance of monopoly: US v. Microsoft, in Kwoka J., White L.J. (eds.) The Antitrust Revolution. Oxford University Press: New York.
  17. Scherer F.M. 1970. Industrial Market Structure and Economic Performance. Rand McNally: Chicago.
  18. Scherer F.M. 1980. Industrial Market Structure and Economic Performance. Rand McNally: Chicago.
  19. Scherer F.M. 1990. Industrial Market Structure and Economic Performance. Houghton-Mifflin: Boston.
  20. Scherer F.M. 2010. Abuse of dominance by high technology enterprises: a comparison of US and EC approaches. Journal of Industrial and Business Economics, 38 (1): 39-62.
  21. United States Department of Justice. 1968. Merger Guidelines 1968. United States Department of Justice Antitrust Division: Washington.

  • History, statistics and theory: Frederic M. Scherer and modern industrial organization Giovanni B. Ramello, Francesco Silva, in ECONOMIA E POLITICA INDUSTRIALE 1/2014 pp.5
    DOI: 10.3280/POLI2014-001001

John Kwoka, Structure, conduct, policy, and performance: the "simple model" of Frederic M. Scherer in "ECONOMIA E POLITICA INDUSTRIALE " 1/2014, pp 137-157, DOI: 10.3280/POLI2014-001008