On the Definition of `Industry' and `Market'

ITHE terms 'industry' and 'market' have been in a state of confusion ever since the I930S, when Chamberlin and Robinson tried to solve the Sraffa problem of decreasing costs in the short run. Contemporary microeconomic theory assigns an unambiguous meaning to 'industry' only in the cases of perfect competition and perfect monopoly. Outside these theoretical extremes there is no theoretical concept to which the term 'industry' can usefully be applied. The term 'market' is in a not much better situation, with the logic of the theory forcing each product of each producer outside of perfect competition to be assigned its own 'market'. Despite these theoretical problems the terms 'industry' and 'market' continue to be widely used by economists, not only in applied work but also in all but the most highly refined textbooks and treatises. For example, in the chapter dealing with equilibrium of the firm in J. R. Hicks's Value and