Course Detail (Course Description By Faculty)

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-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, commitment, cooperation, deterrence, network effects, and multisided platforms.

Bus 33001 or equivalent is highly recommended. In short, the course requires an understanding of microeconomics; otherwise, you will not learn as much and struggle with the material.  

One cannot enroll in BUSN 42001 if BUSN 20900 was taken previously.

Required: Harvard Business Publishing cases, news articles, and academic research.

Example cases from the first half of course: "Moneyball," "The Cola Wars," "Aldi," "Enterprise"

Example cases from the second half: "The Future of Ridesourcing: Uber and Lyft," "Dropbox: It Just Works," "Power Play (Nintendo)," "Ryanair: Dogfight over Europe."

Optional but very strongly recommended textbooks:

1. Luís Cabral, Introduction to Industrial Organization, MIT Press. Either edition is fine. 

2. Besanko, D., Dranove D,. Shanley, M., Schaefer S,. Economics of Strategy, Wiley, 7^th edition.

This course will have a Canvas site.

Grading will be based on class participation and case discussion (35%), the in-class midterm (25%) and the in-class exam (40%). Note that I may adjust these amounts up to five percentage points in either direction based on how aspects of the course play out.

No auditors are allowed.

Grades

Restrictions