Economic Analysis for Business Decisions

Calendar

ses #	TOPICS	KEY DATES
L1	Markets Introduction to the Course Types of Markets: Competitive, Monopoly/Monopsony and Oligopoly/Oligopsony The Boundaries of a Market Product Boundaries, Geographical Boundaries Examples: Bicycles, Prescription Drugs, Airline Travel, and Role of Internet
R1	Review of Own- and Cross-price Elasticities, Market Definition, Consumer and Producer Surplus Use of Supply and Demand Curves Review of Logarithms
L2	Defining the Market Discussion of Market Definition and Market Strategy Case Study: Credit Cards in the U.K.
L3	Analysis of Competitive Markets Supply-Demand Analysis of Government Intervention in Competitive Markets (Examples: Taxes, Subsidies, Tariffs, Import Quotas) Detailed Analysis of the Sugar Quota and its Effects
R2	Further Review of Supply and Demand
L4	Production and Cost Brief Review of Production Economics and Cost Minimization Cost Concepts: Fixed, Variable and Sunk Total, Average, and Marginal Cost in the Short Run and Long Run Accounting Cost vs. Economic Cost	Homework set 1 due
L5	Production and Cost (cont.) Airline Cost Example: User Cost of Capital Economies of Scale and Scope The Learning Curve and Cost Reduction over Time
R3	Review of the Economics of Production and Cost
L6	Consumer Demand Introduction to Consumer Demand: Empirical Demand Analysis and Models of Consumer Choice
L7	Consumer Demand (cont.) Pricing, Product Characteristics and Quality The Analysis of Network Externalities, and their Competitive and Strategic Implications Example from the Software Industry	Homework set 2 due
R4	Review of the Economics of Demand
L8	Time and Uncertainty Intertemporal Prices and Net Present Value Uncertainty and Risk Aversion Waiting and Option Value
L9	Market Power Competition and Entry Monopoly Power and Mark-up Pricing Production across Multiple Plants Pricing with Network Externalities
R5	Review of Market Power (Monopoly)	Homework set 3 due
	Review for Midterm Exam
	Midterm Exam
L10	Pricing with Market Power Various Forms of Price Discrimination Segmented Markets and Pricing Oriented toward Market Segmentation Examples of Price Discrimination in Practice
L11	Pricing with Market Power (cont.) The Use of Two-part Tariffs Volume Pricing Commodity Bundling
R6	Review of Pricing with Market Power
L12	Game Theory and Competitive Strategy Thinking Strategically Duopoly Exercise (in class) to Introduce Cournot First-mover Advantage: Stackelberg Repeated Cournot Cournot-Nash in detail Nash Equilibrium in Other Kinds of Games
L13	Game Theory and Competitive Strategy (cont.) Dominant Strategies Nash Equilibrium again Repeated Games The Prisoners’ Dilemma Sequential Games Threats and Credibility Pre-emptive Moves Entry Deterrence	Homework set 4 due
R7	Review of Game Theory
L14	Collusion and Competition in Oligopolistic Markets Tacit Collusion Examples: Electrical Equipment, Mineral Cartels
R8	Review of Game Theory, Collusion and Cartels
L15	Limiting Market Power Antitrust Laws U.S. vs. Microsoft® Common Property Resources	Homework set 5 due
L16	Auctions and Bidding Alternative Forms of Auctions and their Characteristics The Winner’s Curse
R9	Review of Auctions and Common Property Resources
L17	Transfer Pricing and Vertical Integration Transfer Pricing in the Vertically Integrated Firm Transfer Pricing with Outside Markets Double Marginalization Costs and Benefits of Vertical Integration
L18	Incentives and Information Principal-agent Problem and Incentives Moral Hazard Multi-tasking Promotion Tournaments and Up-or-out Policies Team Incentives Back-loaded Wages
L19	Information and Market Structure Markets with Asymmetric Information Quality Uncertainty and the Market for “Lemons” Adverse Selection Signaling
R10	Review of Transfer Pricing and Asymmetric Information	Homework set 6 due
L20	Externalities and Market Structure Positive and Negative Externalities Market Failure and Forms of Government Intervention Property Rights
	Review for Final Exam
L21	Final Examination