Contents

From the Editor

Michael Woodford — The Fed’s New Communication Strategy: Is It Stealth Inflation Targeting?

John Silvia — Subprime Credit: The Evolution of a Market

Ana Aizcorbe, Stephen D. Oliner, and Daniel E. Sichel — Shifting Trends in Semiconductor Prices and the Pace of Technological Progress

Fernando Sedano — Economic Implications of Mexico’s Sudden Demographic Transition

Orges Ormanidhi and Omer Stringa — Porter’s Model of Generic Competitive Strategies

George Chressanthis — Pharmaceutical Economics

Robert P. Parker — Detailed Industry, Product, Geographic Data from the 2007 Economic Census Become Available in 2009

Book Reviews

Porter’s Model of Generic Competitive Strategies

An Insightful And Convenient Approach To Firms’ Analysis

By Orges Ormanidhi and Omer Stringa

Orges Ormanidhi is a research associate in a joint appointment at the University of Toronto and the University of Guelph. Earlier, he worked as an economic analyst with the Ontario Ministry of Finance. He also worked at Oxford Outcomes, Ltd. and Oxford Internet Institute in the United Kingdom, Statistics Norway, and the university of Tirana in Albania. His research interests include firms’ competitive behavior, heath economic modeling and evaluation, productivity, and punic policy.

Omer Stringa is dean of the Faculty of Economy, University of Tirana, a post that he also held over 1996 – 1998, where he first became a faculty member of the Department of Applied Mathematics in 1973 and Professor in 2002. His varied research interests include transition issues in Albania, including economic reform and fiscal and monetary policies. Earlier research has included portfolio optimization, queuing models, and energy effectiveness. Educated at the University of Tirana, he has a B.S. in mathematics, a B.A. in finance, and a Ph.D. in applied statistics in economics.

A firm’s competitive behavior is an important topic for practitioners, theorists, and policy makers. Among the explanations of firms’ behavior is Michael Porter’s model. We have presented this model along with some alternative approaches: Structure-Conduct-Performance, the New Industrial Organization and Game Theory, the Resource- Based Perspective, and Market Process Economics. These approaches are discussed in terms of their relations, similarities, and differences relative to Porter’s model. In our comparative discussion, we support the use of Porter’s model to evaluate firms’ competitive behavior. Our reasons for this support are this model’s popularity, well-defined structure, feasibility, clarity, simplicity, generality, and its complementarity to two other main approaches. We find the Porter model to be a convenient approach to the firm’s competitive advantage and strategy.

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