Edited by John Foster and Werner Hölzl
Chapter 8: Shakeout in industrial dynamics: new developments, new puzzles
Jackie Kraﬀt 1. INTRODUCTION The growing body of analysis in the ﬁeld of industrial dynamics since the 1980s may lead people to think that industrial dynamics is a new domain of research. This is of course a misperception since some early contributions provided ﬁrst steps towards the elaboration of an industrial dynamics approach. Schumpeter (1912, 1942) did signiﬁcant work emphasizing the role of the entrepreneur in the development of innovation, as well as the evolution of industry in a context of radical change. Marshall (1890, 1920) also proposed many lines of enquiry, such as the fact that the economy is composed of diﬀerent sectors, the growth and decline of which are unequal and intrinsically dependent on the organization of knowledge. This misperception is certainly due to the fact that the post-Second World War decades were characterized by the development of industrial organization that focused on optimality properties and comparative eﬃciency studies of diﬀerent equilibrium situations, and ignored the conditions under which an industry could emerge and evolve over time. From the late 1950s to the 1960s, the structure–conduct–performance paradigm, at the core of the Harvard tradition, focused essentially on the determinants of features of market structure and performance, such as concentration, ﬁrms’ size and proﬁtability. In the 1970s and 1980s, more attention was given to how the behaviour of ﬁrms could have an impact on market structures and performances, with the emergence of new approaches such as the Chicago School, the Theory...
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