market conduct

Market conduct in economics refers to the pricing and market policies that sellers pursue, including their aims and how they coordinate their decisions. This is distinct from market performance, which are the outcomes of these policies, such as the relationship between price and costs, output levels, and efficiency.1

In industrial organization, a key area of economics, the focus is on market structure, public policy towards monopoly, and the economics of technical change. While traditional economic thought often assumes competitive markets with many small firms, modern markets frequently exhibit oligopoly, where a few large firms dominate. Some economists, like Joseph Schumpeter, argue that large firms competing through innovation can drive economic growth more effectively than traditional price competition.2

The concept of "contestable markets," where entry and exit are easy, is a criterion for workable competition. This suggests that even in oligopolistic industries, if markets are contestable, they can function competitively.2