Excellence in

MBA 2013 Managerial Economics
Contact hours per week
Weigand, Jürgen
1. Why markets work: understanding market forces
2. The desirability of market economics: welfare economics
3. Monopoly power: basic and advanced monopolistic pricing behavior (price discrimination, bundling, tying)
4. Strategic interaction in markets: oligopoly (Cournot, Bertrand)
5. Entry and exit decisions
6. Strategic interaction within firms: principal-agent problems
7. Firms versus markets: in-versus outsourcing
8. Auctions and market design
Course description
Students will learn how to apply economic reasoning, with a primary focus on managerial decision making. We start by understanding why markets - usually - work quite well, i. e. how the invisible hand (Adam Smith) coordinates individual decision making such that an efficient outcome obtains. This is also the basis for understanding why and when the state intervenes in markets, e. g. via environmental regulation, or competition policy. We continue by discussing important deviations from the benchmark idea of a competitive economy: How do firms exploit markets power? How do firms strategically interact? What are effects of imperfect information? We will make use of game theory to find answers to these questions and we will cover applications like tying and bundling of products, auctions, procurement decisions, optimal organizational design, markets for lemons and the like.
Teaching methods
Lecture, case studies, problem sets
Standard micro theory (welfare economics, imperfect competition, information economics) and game theory (static games, dynamic games, (infinitely) repeated games)
Robert S. Pindyck, Daniel L. Rubinfeld: Microeconomics