Scope and Methodology of Industrial Economics

A Qualitative Review with Implications for a Developing Economy like Nigeria

Abstract

This study examines the scope and methodology of industrial economics through a qualitative review, with particular emphasis on its implications for developing economies such as a Nigeria. Anchored on the Structure-Conduct-Performance (SCP) paradigm and extended through institutional and behavioural perspectives, the study synthesizes theoretical and empirical literature to provide more context-sensitive understanding of industrial dynamics. The study adopts a qualitative review design, drawing on peer-reviewed journal articles, policy reports and scholarly text, and employs thematic analysis, narrative synthesis, pattern matching and explanation building on analytical techniques. Industrial economics is critical for understanding firm behavior and market structure, yet its application in developing economy like Nigeria often clashes with structural bottlenecks. In Nigeria despite various industrialization policies, the sector remains underdeveloped, heavily reliant on imports and dominated by monopolistic tendencies in key sectors like energy. Industrial economics provides an essential framework for analyzing how market structure, firm behavior, and institutional arrangement shape industrial performance under conditions of imperfect competition. Findings reveal that the traditional SCP framework is inefficient as a linear explanatory model, as industrial outcomes are shaped by dynamic and bidirectional relationships among market structure, firm conduct, and performance. Institutional quality plays a critical moderating role in determining these relationships, particularly in developing economies. In Nigeria, weak institutions, policy inconsistency, infrastructural deficits, and macroeconomic instability distort expected SCP relationships, resulting in persistent industrial under performance; Firm behaviour is also found to be highly adaptive and survival-driven rather than innovation-led. The study concludes that industrial economics most evolved beyond deterministic models to incorporate institutional and context-specific realities. It recommends strengthening institutions, improving competition policy, promoting innovation, stabilizing macroeconomic conditions, and adopting context-sensitive industrial strategies. Strengthen competition and antitrust enforcement institutions, designing industrial policy that complements competition policy, Promoting firm-level R&D and University-industry collaboration, and encouraging firm and industry-level empirical research to guide policy.