A Comparison of the Successive Editions of Industrial Economics: Theory and Evidence—A Shift from Industrial Economics to Industrial Organisation
The first edition of Hay and Morris’s textbook on industrial organisation in 1979 constituted a landmark in the development of the subjects of industrial economics and industrial organisation in the United Kingdom.
It served as a basis for teaching even decades after its publication and, as such, exemplified the orientation taken by the discipline at Oxford and more generally in England. In the preface of the book, Hay and Morris made the objective of their volume explicit:In recent years Industrial Economics has emerged as a major area of economic analysis both in terms of theoretical and empirical research and in terms of the number of courses at undergraduate and graduate level. This book, stemming originally from lecture and seminar series at both levels, is designed for those pursuing such courses (Hay and Morris 1979: v).
This first edition was a standard textbook in which industrial economics was described as a field in which debates and controversies were ongoing. It tried to provide students with synthetic overviews of different approaches. In their introduction, Hay and Morris outlined the difficulty in finding a single definition of industrial economics and raised two particular matters related to it: the disagreements on both theoretical and empirical issues and the confusion over the scope, concepts and methodology of the subject.[20] They made it clear that industrial economics had emerged as a distinct approach from the traditional theory of the firm. In particular, they claimed that:
First, there is an important sense in which the traditional theory of the firm represents a long detour in the history of the study of firms' economic behaviour. Second, the development of industrial economics can partly be seen as a consequence of several inadequacies and faults of analysis in the theory of the firm. Third, while the latter provides a main foundation for the study of industrial economics, several important influences from outside have given a totally different character to industrial economics (ibid.).
Nevertheless, while Hay and Morris's approach to firms and industries rejected the standard version of the theory of the firm, their contribution to the subject still constituted a break from the Oxford tradition of industrial economics, as shaped by Andrews and the Journal of Industrial Economics of the 1950s. This judgement is reinforced by comparing the first edition, which appeared in 1979, with the second edition, published in 1991, under a slightly different title, Industrial Economics and Organisation: Theory and Evidence. The 1979 edition referred only twice to Andrews' normal cost theory. The first reference appeared in a chapter dedicated to “pricing behaviour” in which Manufacturing Business was mentioned only for its empirical evidence on pricing. The book was depicted as a series of empirical investigations, which supported the validity of the cost-pricing principle and tried to incorporate this into a theory of competition. It is clear, however, that in the authors' minds, Andrews' book only constituted new evidence to support the 1939 Hall and Hitch article on pricing. As regards Marshall, Hay and Morris adopted a very cautious approach while arguing that Post-Marshallians had lost a part of Marshall's message in dedicating too much work to purely empirical studies. Finally, they indicated their support for an approach to industrial organisation that would, once again, combine empirical and theoretical aspects, as Marshall had done.
The second edition of Hay and Morris's textbook confirmed these comments. Andrews was again mentioned infrequently, with Manufacturing Business only being considered among various empirical contributions, its theoretical aspects being completely neglected. Marshall received more or less the same treatment as he did in the first edition. The main difference between the editions was in the ebbing of controversy within the field of industrial organisation between 1979 and 1991, mainly because of the increasing domination of game theory in the theory of imperfect competition and strategic interaction. Interestingly, the change in title between the two editions did not merit comment or explanation from the authors. However, the second edition indicated a shift away from empirical studies towards formalisation, which had initially emerged in the United States. Overall, the publication of Hay and Morris’s textbook depicted the waning influence of Marshall and to the empirical approach to the firm.
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