In praise of the Old I.O.

“Old I.O.” is the body of empirical regularities obtained by cross-section statistical methods following their introduction by Bain [Bain, 1951. Relation of profit rate to industry concentration: American manufacturing, 1936-1940. Quarterly Journal of Economics 65, 293-324.]. Its researchers did not seek to fit particular theoretical (oligopoly) models to market data, apart from theoretical conditions for sustainable collusion, but they did establish a large number of empirical regularities - cross-section associations between dimensions of performance (allocative efficiency, productive efficiency, turnover of suppliers) in markets and their structural and behavioral features. These associations continue to serve a wide range of uses for economic understanding and policy formation.