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could give it greater value because of itsenhanced social dimension. The authorshave also evaluated perspectives of grea-ter affirmation for social economy in Cro-atia.

The energy goals of the Lisbon Stra-tegy are analyzed by Ana-Maria Boromi-

sa, whose targets of achieving competiti-veness, sustainability and security of ener-gy supply are inherited by Europe 2020 aswell. Nevertheless, these achievements arehindered by the often conflictual natureand trade-offs between these goals andmember states' reluctance to allow libera-lization of the energy market sector. Re-garding Croatia's energy policy, it is sha-ped by national development goals, theEU integration process and the EU energypolicy itself. Finally, the environmentaldimension of the EU development strate-

gies is given by Sanja Tima and Helenaermak. They indicated that the 6th Envi-ronmental Action Programme launchedin 2001 became the basis for the develop-ment of the Lisbon Strategy's environmen-tal branch. The environmental dimensionrepresents a constituent part of thenew Eu-rope 2020 strategy with its emphasis on"green growth", where it serves as a plat-form for increased innovation, producti-vity and employment. However, the suc-cess of environmental goals in the futureperiod will depend on their policy inte-

gration in other areas and better coopera-tion among different stakeholders. Theauthors also evaluate compliance with theEU environmental acquis among the newEU member states, which can serve as agood basis for Croatia's implementation ofthe EU environmental protection policy.

Launching of the Europe 2020 stra-tegy as the new EU development agendarepresents perfect momentum for the eva-

luation of the Lisbon decade and perspec-

tives of the new strategy. Therefore, thebook represents a valuable contribution tothe analysis of the entire EU governanceevolution that has been streamlined by theLisbon-type reforms, a tendency confir-med by the new strategy. Indeed, Europe2020 now holds a pivotal position in theentire EU policy-making because all majorpolicies would have to incorporate its re-commendations that represent the tenetsof the EU's development in the upcomingperiod. These tenets are knowledge andinnovation, competitiveness and green

growth underpinned by social inclusionand higher levels of employment. This hasparticular importance for Croatia, as thefuturenew EU memberstate,which shoulduse the Europe 2020 strategy as leveragefor reforms, thus paving the way for its ef-ficient EU membership. In conclusion, therecommendations and evaluation of bestpractices in this book represent a valuablecontribution on that path. The book is a-vailable fordownload at theIMOweb-page:http://www.imo.hr/node/1231

Saa vrljak

doi:10.5559/di.20.2.16

Paul Belleflammeand Martin PeitzINDUSTRIALORGANIZATIONMarketsand Strategies

Cambridge University Press, Cambridge (UK)2010, 702 pp.

In the past two decades there has beena gro-wing interest in industrial organization.Over the years, the study of industrial or-ganization, as the analysis of imperfect mar-kets and price theory, has evolved from anarea in microeconomics to a self-definingpart of economics strongly related to other

DRU[. ISTRA@. ZAGREB RECENZIJEGOD. 20 (2011), I PRIKAZIBR. 2 (112),STR. 583-599

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disciplines such as business and manage-rial economics, marketing, innovation eco-nomics, etc. As it has gained in importance,so the books on the subject have prolife-rated. When many would say there wasno need for another textbook in industrialorganization, a new comprehensive bookarises; with the sole purpose to evaluatecontemporary topics, as well as to com-municate new findings and recent devel-opments in the field of industrial organi-zation.

The book "Industrial Organization:Markets and Strategies" aims at present-ing the role of imperfectly competitive mar-kets for private and social decisions, withthe emphasis on strategic competition andmarket power. This title provides a compre-hensive guide to industrial organizationin the imperfect market conditions of the

real world situations and the text itself en-sures a learning framework for understan-ding the two basic concepts of the book,namely markets and strategies. Coveringtopics such as basic models in oligopolisticcompetition and modern theory of mono-poly, sources of market power, pricing stra-tegies, tacit agreements and competitionpolicy, predatory behaviour, asymmetricinformation etc., it analyses most of the cur-rent intermediate microtheory. However,it also covers topics in latest developmentson product bundling and branding strate-

gies, new forms of price discrimination, re-striction in vertical supply relationships, in-novation issues, intellectual property pro-tection and market intermediation. Theo-ry is useless unless it leads to real-worldapplications. In such a manner, the book of-fers an insightful display of many real-lifecases and examples, as well as simple mo-dels and diagrams for illustrative purpo-ses which are featured by not so complex

algebraic expressions. While formal in its

approach, the book is written in such away that it requires certain basic mathe-matical knowledge and proficiency in ele-mentary and applied microeconomics. Thistextbook systematically presents and makesaccessible the advances and new learningof the past twenty years in the field of in-dustrial organization.

The book is divided into 9 parts and23 chapters with the addition of an Ap-pendix. Each part starts with a short intro-duction that describes its content, where-as every chapter ends with review ques-

tions and a guide to relevant literature. Eachchapter is theoretically tainted, yet providesnumerous up-to-date real-world cases.

The first part of the book (Part I:Getting started) describes some of the basicnotions in the field of industrial organiza-tion and issues related to markets and stra-tegies. By explaining the level, the scopeand the organization of the book, the au-thors try to outline the major areas of theanalysis in order to help the reader in com-prehending the concept of the book. Some

basic microeconomic terms such as firms,

consumers, strategies and market powerare explained as well. The second part ofthe book, suggestively namedPart II: Mar-ket power, deals with the static and dynam-ic aspect of imperfect competition; prima-rily developing basic models of oligopolis-tic competition. By explaining the marketinteraction and performance between firmsand consumers, it tries to assess marketpower and market strategies, for these arethe basic concepts of the book. Dealingwith Cournot's and Bertrand's oligopolis-tic models, it focuses on the nature of ma-

in variables, price and quantity, in the con-text of market power. By introducing Stac-kelberg's model, the book engages in theanalysis of sequential quantity competi-tion and the models of dynamic entry.

Part III: Sources of market power,as thetitle suggests, evaluates themes such as pro-duct differentiation, advertising and con-sumer inertia. Simple theoretical modelsand real-world cases assure that these for-

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mal issues correspond to other chapters;especially since this part is conceptuallyrelated to the next part of the book. PartIV: Pricing strategies and market segmenta-tionexamines how firms with market powerdesign adequate pricing strategies, i.e. itshows how to exercise market power inorder to extract more consumer surplus byeffectively selling at different prices to dif-ferent consumers. Thereby, issues of grouppricing and personalized pricing, menupricing, bundling and intertemporal pricediscrimination are examined. This part ofthe book, though mathematically inclined,offers a concise presentation. Hence, thispart could be the most interesting part tothe business practitioners. Part V: Productquality and information, theoretically as wellas empirically, through up-to-date examplesevaluates the problem of asymmetric in-formation, price and advertising signals,and strategic marketing tools. This part fa-miliarises the reader with the concept ofexperience goods, asymmetric informationproblems, application of signaling gamesand the role of branding, for these tacticsshow how market power can be created,maintained or exercised.

Part VI: Theory of competition policyisone of the most interesting parts of the

book for it returns to the theory throughnormative approach. It deals with collusive

behaviours (price fixing) within cartels andtacit agreements, horizontal mergers andvertically related markets, as with the pro-

blem of deterred or accommodated entrywithin exclusionary conductof incumbents.As authors point out, this part largely ad-dresses competition policy issues.Part VII:R&D and intellectual property is concernedwith activities of generating informationand knowledge, thus we can speak about

themes which cover the area of innova-

tion economics. This part of the book ex-amines the interplay between the marketstructure and innovation, namely R&D, inorder to assess how market structure af-fects the incentives for conducting R&Das well as how the monopolist's incentiveto innovate may influence market struc-ture. This part also adopts the normativeperspective when it studies how intellec-tual property protection should be orga-nized on behalf of its types, transferabilityetc. The last chapter provides an interest-ing discussion on digital economy; the pi-

racy of digital products and the develop-ment of open source software.

Part VIII: Networks, standards and sy-stemspresents a continuation on the ana-lysis of information economy which eva-luates a number of issues that are specificto the demand and supply side of marketwith network goods, such as compatibili-ty of products, their availability, qualitydifferentiation etc. In that manner, Part VIIIanalyzes both markets and strategies fornetwork goods in the framework of so--called "network technologies". Interesting

examples and real case studies, especiallywith well known instant messaging soft-ware (MSN, AOL, Yahoo) can help a read-er to comprehend and appreciate the to-pic. Finally, the last part of the book (PartIX: Market intermediation) evaluates marketintermediation by analyzing markets withintermediated products as well as the de-velopment of reputation on such markets.Intermediaries became an important partof contemporary markets since their func-tion, as the authors point out, of visiblehand can be somewhat crucial in the mar-

ket operations on behalf of competitionpolicies, price dispersions, asymmetric in-formation issues and internalization of net-work effects.

The book also consists of two shortappendices. Whereas the first offers arather simple explanation of the issues ingame theory, the second demonstrates theissues in competition policy in a reason-able manner. The main and only criticism


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of the book is that it does not provide adetailed evaluation of the enormous stra-tegic possibilities that game theory offersin strategic interactions. Game theory has

become one of the most intriguing partsof microeconomics, thus it is a very impor-tant subject in industrial organization. In-dustrial organization was in fact rejuvena-ted by breakthroughs in noncooperativegame theory. This criticism, namely, refersto the fact that the topic of the book ob-serves industrial organization in the per-spective of markets and strategies, whichis a research domain of game theory. Tho-ugh the book evaluates game theory con-cepts in some aspect (brand proliferationgame, patent race, noncooperative entrydeterrence game, coordination game), itspotential is not exploited enough.

Nevertheless, the book has manystrengths. First, the book provides an ex-cellent discussion on the wide range of in-dustrial organization topics, whereas eachchapter centers on the explanation of oneproblem. By introducing some new devel-opments in industrial organization, it of-fers an alternative perspective to marketpower and strategies which can be of in-terest to the reader. Second, since the bookhas the form of a textbook, it is conciselywritten and well organized. It consists ofmany simple graphical presentations anddetailed models with a lot of real-world

cases and practical examples. It is also ac-companied by a website. Therefore it canbe of great use to students, researchers andbusiness practitioners. As the authors po-int out, the book is designated for ad-vanced undergraduate and master level,however, it can be used for advanced cour-ses and PhD programs as well. Though,whoever wants to read it, will need tohave an academic background in interme-

diate microeconomics or business econo-

mics.In a nut-shell, the book "Industrial

Organization: Markets and Strategies" pre-sents an excellent textbook material whichprovides a solid theoretical foundation inindustrial organization and applied micro-economics with real-life applications, com-prehensively exploring relevant issues inimperfect market structures, sources of mar-ket power and strategic decision-makingwithin the private and social framework.The virtue of the book lies in the authorscapability to make accessible, sometimes

very complicated issues and models in in-dustrial organization, to a wider audience.Thus, this book deserves a place in the li-

brary of every economist who wants tounderstand strategic behaviour within dis-tinct market possibilities.

Daniel Tomi

doi:10.5559/di.20.2.17

HRVATSKO-

-CRNOGORSKI DODIRI /CRNOGORSKO--HRVATSKI DODIRI:Identitet povijesne ikulturne batineCrnogorskog primorja

Lovorka orali (uredila)

Zagreb, Hrvatski institut za povijest, Maticahrvatska, 2009., 852 str.

Zbornik radova "Hrvatsko-crnogorski do-diri / crnogorsko-hrvatski dodiri: identitetpovijesne i kulturne batine Crnogorskogprimorja" nastao je objavljivanjem radovapredstavljenih na meunarodnom znan-stvenom skupu pod naslovom Hrvatsko--crnogorski dodiri / crnogorsko-hrvatski dodiri:identitet povijesne i kulturne batine Crnogor-skog primorja. Na skupu to su ga organi-

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