Question

Economic ：Describe the Structure-Conduct-Performance paradigm – its weaknesses and its strengths.

Answer 1

The structure-conduct-performance (SCP) paradigm is applied as an analytical framework, for making the relations amongst the market conduct, market structure, and market performance. The paradigm asserts that conditions of demand and supply in an industry would determine the structure

Strengths: The SCP paradigm is considered to be the pillar of the theory of industrial organization and since its conception it has been a starting point when analysing industries and markets, not only in Economics, however in the fields of business management as well as controlling. It has strength for offering a holistic vision and identifying a broad variable range subject to examination. The method highlights the significance of specific characteristics such as conditions on entry; importance for the number, size of the firm; firm's competitiveness; conduct of firm towards the strategies, price and profitability

Weakness: The dynamic behaviour of the sellers and buyers has an impact on the industry, making it difficult to establish and predict the fixed market structures. It becomes difficulty when trying to explain the paradigm due to the shortage of data and the multiple extension and definitions of markets.