Want to understand how exchanges compete with each other? Industrial organization economics can help you. This set of theories studies the real behavior of firms in the market—especially in scenarios of imperfect competition, such as oligopoly.

Why focus on this? Because the crypto market operates this way. You see, the number of top exchanges is limited; they set fee rates, launch new features, and compete for liquidity. This is not perfect competition but each has its own market power.

The core aspects to look at are threefold: First is market structure—how many players are there? Are the entry barriers high? Second is corporate behavior—how are prices set? How are new products launched? Third is market performance—what benefits do consumers get? How efficient is the market?

Applying this to the crypto space makes it even more intuitive. When a certain exchange launches innovative features, other platforms follow suit. When liquidity is concentrated in a few major players, smaller platforms find it hard to break through. These are the competitive dynamics explained by industrial organization economics. Once you understand this framework, you can see why the market landscape looks the way it does and how it might evolve.