1. The Industrial Organization Model
This model, pioneered by Edward.H. Mason and Joe. Bain, provides a useful conceptual framework for analyzing the structure of real world markets.

2. For example, suppose we want to compare the structure of the pharmaceutical industry to the farm equipment industry. The industrial organization model gives us the tools to carry out this task.

3. The I. O. Model
Market Structure
Market Conduct
Market Performance
Government Policy

4. Key aspects of market structure
Number and size distribution of sellers
Number and size distribution of buyers
Degree of product homogeneity or heterogeneity
Importance of economies of scale
Barriers to entry

5. Aspects of market conduct
Pricing strategies
Product development strategies
Advertising and promotion strategies
Means of coordination and cross-adaptation of price, product, and sales promotion policies among competing sellers
Legal tactics

6. Aspects of market performance
Relationship between price and marginal cost (Allocative efficiency)
Technical efficiency
Dynamic efficiency
X-inefficiency

7. Recall this market type from principles of micro
Pure competition
Recall this market type from principles of micro
Large number of buyers
Large number of sellers
Homogeneous product
Potential entrants suffer no disadvantages vis à vis established sellers

8. By contrast, the market for desktop operating software is a far cry from perfect competition. Microsoft dominates this market segment.