Course Detail (Course Description By Faculty)

This course applies microeconomics, particularly the economics of industrial organization, to analyze decisions managers face in business environments. We focus on strategic decisions that impact profitability.

In the first half, we take a price-theory approach, assuming rivals’ actions are fixed to isolate key tradeoffs that managers face. The second half uses a game-theory approach, where managers’ actions directly affect their rivals’ payoffs, and vice versa.

Topics include pricing, positioning, industry profitability, entry and exit, boundaries of the firm, 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," "Airborne Express."
Example cases from the second half: "The Future of Ridesourcing: Uber and Lyft," "Dropbox: It Just Works," "Power Play (Nintendo)," "LinkedIn," "Ryanair: Dogfight over Europe."

Optional but strongly recommended textbooks:

• Cabral, Luís. Introduction to Industrial Organization, MIT Press, 2^nd edition, 2017
• Besanko, D., Dranove D,. Shanley, M., Schaefer S,. Economics of Strategy, Wiley, 7th edition.

This course will have a Canvas site.

Grading will be based on weekly memos (5%), class participation and case discussion (30%), an in-class midterm (25%), and an in-class final exam (40%). I reserve the right to adjust these components by +/- 5% based on the course progression.

No auditors are allowed.