It has gradually become clear that explanatory models about the market structure-performance relationship which invoke a uniform reaction pattern on behalf of the competitors in the market, have been unsuccessful when confronted with the whole set of results of empirical studies. As a conse- quence, the theoretical concepts have become subject to severe doubts. As Phillips [I2, P. 27] stated: 'The structure-conduct-performance tradition in industrial organization has been strongly affected by simple and static micro-economic theory. Indeed, one might say that the corpus of the domi- nant analytic method in studies of industrial organization is nothing more than a naive, Cournot-like model of a market.' Cournot-like modelsl assume closed markets, short-sighted seller behavior and known cost and demand functions generally of a simple form. Under such assumptions a positive relationship between concentration and price-cost margins can be expected. In response to the limited applicability of the Cournot model of market behavior two alternative types of theories have been developed