This course introduces students to "managerial economics," the application of microeconomic theory to management problems. Microeconomic theory is a remarkably useful body of ideas for understanding and analyzing human behavior in a variety of contexts. My goal in this course is to get you to internalize this body of theory well enough so that you can analyze management problems. While this is a "tools" course, we will be mindful of applied business problems throughout the course. After presenting the competitive model we will dwell on other market structures more like those encountered by typical firms (monopoly, oligopoly, monopolistic competition). We will spend some time on microeconomic lessons on the development and use of market power, as well as strategic interaction among firms. Finally, we will spend some time on the theory of market failure.

The objective of this course is to expose you to some active areas of research on the role of government in markets where competitive equilibria "fail." We will emphasize the importance of market structure and industrial performance, including the strategic interaction of firms. The course consists of two parts. In the first part, we study the theoretical foundations of regulation, including pricing, agency theory, and the political economy of regulation. In the second part of the course, we study empirical approaches to assessing market power and to evaluating the potential for government intervention and alternative regulatory regimes in various settings. Specific topics include the economic analysis of mergers, price discrimination, vertical relations (predatory strategies, tying contracts, resale price maintenance etc.), health and safety regulation, and network externalities. The course will be participatory in nature. Students are required to complete a research paper that might develop into part of a dissertation.

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