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Managerial Economics

Industrial organization is a field of microeconomics that explores the dynamics of industries and in particular the way firms compete with each other. Therefore, this course focuses on strategic competitive behavior, with special attention being paid to the perspective of newly founded ventures. Within this context we will discuss how to assess market power /structure and its implications, pricing mechanisms, as well as how regulations impact strategy design. The course uses a mixture of case studies, lectures, guest lectures and a final written exam.
Course code
ECON505
Course type
MSc Course
Weekly Hours
2,5
ECTS
5
Term
HS 2021
Language
Englisch
Lecturers
Juniorprof. Dr. Anna Ressi
Please note that exchange students obtain a higher number of credits in the BSc-program at WHU than listed here. For further information please contact directly the International Relations Office.
The main goal of this course is to provide an introduction to the main concepts and analytical tools of the theory of managerial economics. Managerial economics is a broad research stream that aims to provide a framework for managerial decision-making. It applies theories of microeconomics to help managers understand complex problems and make better decisions. In this course, we will predominantly confront managerial issues that involvestrategicinteractions between multiple organizational or market participants, i.e. situations where a person’s action has an identifiable impact on another person and prompt them to react. Examples of strategic situations in a business realm abound and include, for example, hiring and incentivizing employees, sourcing inputs, designing, pricing, and distributing products, or investing in advertising and research and development. The course aims to teach students aspiring to manage businesses to use simple game-theoretic models and reasoning, which will crucially improve their understanding of strategic managerial decision-making. We use this analysis to investigate questions such as:
  • What are possible pricing strategies to maximize profits?
  • When is it better to follow a low- than a high-quality product strategy?
  • Should you grant your distributors exclusive territories for selling your product?
  • How heavily should you invest in R&D?

At the end of the course, students should have developed an economic perspective that will be appropriate for understanding, suggesting, and evaluating managerial policies in a variety of industries.

The course consists of 7 sessions (for details please see the Syllabus) and uses a mixture of lectures, short case studies, and classroom discussions.

Date Time
Friday, 03.09.2021 08:00 - 11:15
Tuesday, 07.09.2021 15:30 - 18:45
Monday, 13.09.2021 15:30 - 18:45
Thursday, 23.09.2021 11:30 - 13:00
Thursday, 23.09.2021 13:45 - 15:15
Wednesday, 29.09.2021 15:30 - 18:45
Tuesday, 05.10.2021 08:00 - 11:15
Tuesday, 12.10.2021 15:30 - 18:45
Wednesday, 13.10.2021 19:00 - 20:30
Monday, 18.10.2021 14:00 - 15:30
By the end of the course, students will advance their knowledge in different ways:

Learning the concepts of game theory and applying them to practical economic issues and real-world scenarios will

  • help you to understand the basic drivers of strategic behaviour and be helpful for your master thesis.
  • improve your critical thinking in other courses.
  • teach you to structure a complex problem and reduce it to the important core, which will be useful for your university and business career.
  • help you to ask the right questions or detect inconsistencies in discussions, which will improve your communication skills.
No textbook isexplicitlyrequired for the course. However, the course and the lecture slides will go relatively close along the lines of Belleflamme, P., & Peitz, M. (2010). Industrial Organization: Markets and Strategies. 2ndedition. Cambridge University Press.This is the main text you can access for further reading. It will be supplemented with lecture notes byPepall, L., Richards, D., & Norman, G. (2014). Industrial Organization. Contemporary Theory and Empirical Applications. 5thedition. John Wiley & Sons.Allen, W. B., Doherty, N. A., Weigelt, K., & Mansfield, E. (2013).Managerial economics: Theory, applications, and cases. New York: WW Norton.Vohra, R.V. (2020). Prices and Quantities. Cambridge University Press.
  • Lecture
  • Case studies
  • Problem Sets
Final grades are determined on the following basis:
  • 80% final exam
  • 20% group presentation
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