Structure, conduct, policy, and performance: the "simple model" of Frederic M. Scherer

Prominent among F.M. Scherer?s many contributions to industrial economics and policy has been the analytical framework set out in his Industrial Market Structure and Economic Performance, first published in 1970 (Scherer, 1970). At the outset of that book, Scherer described what he termed a "simple model" of the relationship between underlying conditions, market structure, firm behavior, and economic performance. This essay makes clear that Scherer?s model was anything but simple: this model offered a unifying framework to a vast body of literature; it provided explicit causal - sometimes complex - linkages between its stages; and it had, and has continued to have, implications for competition policy across several decades. After discussion of the components of Scherer?s model, some of its implications are developed. These include the Horizontal Merger Guidelines, which reflect an emphasis on market structure together with a recognition of the importance of other considerations, and also remedies policies toward companies violating antitrust laws. Scherer?s co-authored brief on the Microsoft antitrust case is examined for its careful application of the "simple model" to a complex policy setting.