The course applies microeconomics—mainly the economics of industrial organization—to analyze decisions managers face in business environments. It focuses on strategic decisions that drive profits.
The class is interactive. Roughly one-third to one-half of each class is devoted to lecture, with the remaining (majority) of time devoted to case discussion.
The first half of the course takes a price theory approach to managerial decision-making. The actions of rivals are mostly assumed fixed, so we can isolate key tradeoffs that they face. The second half takes a game theory approach, in which managers’ actions directly affect their rivals’ payoffs, and vice versa.
Topics include pricing, positioning, patterns and determinants of cross-industry and within-industry profitability, entry and exit, vertical integration and boundaries of the firm (i.e. the “make or buy” decision), commitment, cooperation, deterrence, network effects, and multisided platforms.