The Influence of Industry Structure on Firm Perfomances and Conduct in a Managerial Theory of the Firm

In this paper a general model of industrial organizations is developed along the lines of the managerial theories of the firm. The utility function of management and shareholders – the two important stakeholders of contemporary organizations – are embedded within a framework due to Svejnar and Kalai. The model explicitly considers market structure, entry conditions and firm financial structure in order to generate a wide range of empirically verifiable hypotheses. The equilibrium and comparative static implications of the formulated model are explored. Several empirically testable proposition are generated by this analysis.