MOØ217 Economics of Strategy

Contents and structure

This course provides an economic perspective on business strategy. We examine questions such as "What characterizes competition between firms in the short and long run?", "How may contracts be used to motivate employees?", and "Should a firm only produce in-house, or trade with other firms?"

Our analytical framework will be numerous principles and models from the field of microeconomics. Throughout the course, however, the exposition will focus on economic intuition rather than mathematical rigor.

The course covers five main topics: 1) Introduction to microeconomics, 2) Firm boundaries, 3) Market and competition analysis, 4) Competitive advantages, 5) Contracts and incentives.

Learning Outcome

Knowledge

On completion of this course a student has advanced knowledge regarding:

• Basic economic concepts relevant to business strategy
• Microeconomic principles and theories that can be used to analyze business strategy
• Similarities and differences between the fields of industrial economics and business strategy

Skills

On completion of this course a student is able to:

• Analyze strategic interaction in various market settings
• Analyze how incentives can be quantified and provided
• Analyze factors relevant for determining firm boundaries

Competence

On completion of this course a student is able to:

• Use economic concepts to identify and understand firms' strategic choices
• Use microeconomic principles and theories to analyze firms' strategic choices
• Critically discuss how economic models should and should not be applied to real-world issues

Entry requirements

None

Teaching methods

Lectures. Cases and problem solving.

Compulsory learning activities

None

Assessment

The exam is a five-hour school exam.

The grading scale A-F is used, where F is a fail.

Examination support material

Basic calculator

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