Industrial Economics

IDEA: You have been hired as a consultant to conduct some market analysis. In particular, your client,

who is unfamiliar with the Evanston market for some product, wants a complete overview of the local

market and your determination of whether it could be profitable to enter this market and begin selling the

product. This is convenient, because by gathering and analyzing some real-world evidence you will better

understand how ECON 349 theory works in practice. Your report should address the following:

SECTION 1: Behind the Scenes

1. PRODUCT X: For this project you will need to pick a good or service that is physically available in

Evanston. Ideally, your product is sold a modest number of firms (say, 3-12). Review the slides from

the antitrust/merger lectures on defining a market. Define your market so it is broad enough to be

interesting, yet narrow enough to be tractable for this project. Be sure to consider the product size and

scope (i.e., is it a basic or complex service)? Describe your product in detail.

2. INPUTS & COSTS: What are the major inputs necessary to produce X, including labor, capital, and

natural resources? Which will be larger: fixed or variable costs? What capital inputs would we

consider fixed in the short run? Are there economies of scale? Economies of scope? Economies of

experience? List some products that are complements in production or substitutes