Modern Industrial Organization, second edition, combines the latest theories with empirical evidence about the organization of firms and industries. It goes beyond the descriptive traditional structure-conduct-performance approach by using the latest advances in microeconomic theory, including transaction-cost analysis, game theory, contestability, and information theory. Practical examples illustrate the role of each theory in current policy debates, such as whether mergers promote economic efficiency (Chapter 2), whether predatory pricing is likely to be a serious problem (Chapter 10). whether preventing manufacturers from restricting distributors' prices would benefit consumers (Chapter 13), whether providing consumers with more information about prices or products would increase welfare (Chapter 14), whether advertising is harmful (Chapter 15), whether joint ventures are the best means of encouraging research (Chapter 17), whether current antitrust laws promote competition and increase welfare (Chapters 6. 13, and 20), and whether government regulation does more harm than good (Chapter 21).