15.010
Economic Analysis for Business Decisions
Introduces principles of microeconomics as a framework for making more informed managerial decisions. Discusses the supply and demand paradigm with applications to digital marketplaces, innovation, sources of market power, and strategic pricing. Provides an introduction to game theory to study competition and cooperation both within and between firms. Restricted to first-year Sloan MBA students.
Fall 2004
Topics
- Further Review of Supply and Demand
- Review of the Economics of Production and Cost
- Review of the Economics of Demand
- Review of Market Power (Monopoly)
- Review of Pricing with Market Power
- Review of Game Theory
- Review of Game Theory, Collusion and Cartels
- Review of Auctions and Common Property Resources
- Review of Transfer Pricing and Asymmetric Information
- Final Examination
Readings
- In addition to these readings, you should keep informed about current economic issues by reading the Wall Street Journal or the Business section of the New York Times on a regular basis. A magazine such as Business Week or The Economist is also useful for this purpose.
- The readings in the table below are from the textbook: Pindyck, Robert S., and Daniel L. Rubinfeld. Microeconomics. 5th ed. Upper Saddle River, NJ: Prentice-Hall, 27 July 2000. ISBN: 0130165832.
- Pindyck and Rubinfeld: Chapters 1 and 2
- Defining the Market
- Analysis of Competitive Markets
- Pindyck and Rubinfeld: Chapter 9
- Production and Cost
- Production and Cost (cont.)
- Argote, L., and D. Epple. “Learning Curves in Manufacturing.” Pittsburgh, PA: Carnegie Mellon University, Tepper School of Business, 1990. GSIA Working Papers No. 89-90-02.
- Ghemawat, P. “Building Strategy on the Experience Curve.” Harvard Business Review 63 (March-April 1985): 143-49.
- Consumer Demand
- Consumer Demand (cont.)
- Time and Uncertainty
- Market Power
- Pricing with Market Power
- Pricing with Market Power (cont.)
- Game Theory and Competitive Strategy
- Game Theory and Competitive Strategy (cont.)
- Pindyck and Rubinfeld: Chapter 12.4-12.5, 13.1-13.6
- Pfeifer, Phillip E. and James V. Gelly. “Lesser Antilles Lines: The Island Of San Huberto.” Charlottesville, VA: Darden, University of Virginia, 1991. Case No. UVA-QA-0355. (no class preparation required - analyzed in Homework set 5)
- Collusion and Competition in Oligopolistic Markets
- Porter, Michael. “General Electric vs. Westinghouse in Large Turbine Generators (A).” Boston, MA: Harvard Business School, 1980. Case No. 9-380-128.
- Limiting Market Power
- “Executive Summary of the Antitrust Laws.” Kaye, Scholer’s Antitrust Deskbook. New York: Kaye, Scholer, Fierman, Hays & Handler, 1992, pp. 3-19.
- McGahan, Anita and Julia Kou. “Microsoft® Corp.’s Pricing Policies.” Boston, MA: Harvard Business School, 1995. Case No. 9-975-173).
- Auctions and Bidding
- Transfer Pricing and Vertical Integration
- Incentives and Information
- Information and Market Structure
- Externalities and Market Structure
Prerequisites & course information
Prereq: None G (Fall) 4-0-5 units
Sources
- Course catalogue ↗2026–2027
- MIT OpenCourseWare ↗Fall 2004
- MIT OCW calendar ↗
- MIT OCW syllabus ↗
- MIT OCW readings ↗
- Historical MIT OpenCourseWare offering. Named reading entries and schedule topics are automatically extracted from the linked source pages.