Ch 1 Introduction 3 questions in IO 1. Why are markets organized or structured as they are? 4 aspects of market structure (1)Firm boundaries. What determines the extent of a firm's activities in production? In particular, what are the factors responsible for determining the extent to which a firm is vertically integrated? (2)Seller concentration seller concentration is a measure of the number and size distribution of firms. Industrial organization attempts to identify the factors that influence or determine seller concentration (3)Product differentiation. Product differentiation exists when product produced by different firms are not viewed as perfect substitutes by consumers. What are the factors responsible for the extent of product differentiation (4) Conditions of entry. The conditions of entry refer to the ease with which new firms can enter a marketCh.1. Introduction • 3 questions in IO • 1. Why are markets organized or structured as they are? • 4 aspects of market structure • (1)Firm boundaries. What determines the extent of a firm’s activities in production? In particular, what are the factors responsible for determining the extent to which a firm is vertically integrated? • (2)Seller concentration. seller concentration is a measure of the number and size distribution of firms. Industrial organization attempts to identify the factors that influence or determine seller concentration. • (3)Product differentiation. Product differentiation exists when product produced by different firms are not viewed as perfect substitutes by consumers. What are the factors responsible for the extent of product differentiation. • (4)Conditions of entry. The conditions of entry refer to the ease with which new firms can enter a market