Checking date: 10/07/2020

Course: 2020/2021

Economics for Business
Study: Master in Business Administration (MBA) (301)

Coordinating teacher: ORTEGA DIEGO, JAIME

Department assigned to the subject: Department of Business Administration

Type: Compulsory
ECTS Credits: 3.0 ECTS


Students are expected to have completed
There are no pre-requisites for this course.
Competences and skills that will be acquired and learning results.
1. Perform basic economic analyses of production and pricing decisions. 2. Perform basic economic analysis of market competition. 3. Identify economically relevant variables in organizational problems that involve potentially many aspects. 4. Understand organizational problems in terms of the incentives of the parties involved.
Description of contents: programme
This course presents the main microeconomic tools that are useful to inform business decision making. These tools are relevant to production and pricing decisions and are also important to understanding the market environment in which firms operate. The main emphasis of the course is in developing analytical skills to understand a range of problems commonly faced by firms and the costs and benefits of alternative solutions that managers can consider. Each 3-hour session will have two parts. The first part will be structured as a participative lecture and its main objective will be to present problems for which economics has provided interesting insights, to explain the solutions suggested by economics, and to understand their applicability to business. During this part of the session, you are encouraged to participate asking clarification questions and relating your own work experience to the topics. The second part of the session will be a discussion session. We will generally discuss a case study, except for two sessions in which we will discuss the results of a game played during the previous days. In both cases, the second part of the session will be related to the contents of the previous week's lecture. After each session, you are expected to (a) study the class notes, making sure to understand the concepts and analytical tools; and (b) carefully read the case material to be discussed in the following session or (in case of games) (c) actively participate in the game to be played during the week. There are ten topics covered in this course, corresponding to the ten weeks in which the course takes place: 1. ECONOMICS, MARKETS AND ORGANIZATIONS Readings: - Milgrom and Roberts (1992), Chapter 1. - Brickley, Smith, and Zimmerman (2009), Chapters 2-3. 2. DEMAND Readings: - Brickley, Smith and Zimmerman (2009), Chapter 4. Exercise: Expatriation Game - Instructions. 3. PRODUCTION AND COST Readings: - Pyndick and Rubinfeld (2015), Chapters 6-7. - Brickley, Smith and Zimmerman (2009), Chapter 5. Exercise: Expatriation Game - Discussion of results. 4. COMPETITIVE MARKETS Readings: - Brickley, Smith and Zimmerman (2009), Chapter 6 (pp. 180-185). - Horngren, Foster and Datar (2015), Chapter 25. - Milgrom and Roberts (1992), Chapter 3. Case: FinePrint Company 5. PRICING WITH MARKET POWER Readings: - Brickley, Smith and Zimmerman (2009), Chapter 7. - Milgrom and Roberts (1992), Chapter 3 (pp. 73-77) and Chapter 4. Case: Transfer Pricing at Timken 6. BUSINESS STRATEGIES: A GAME THEORY PERSPECTIVE Readings: - Brickley, Smith and Zimmerman (2009), Chapter 9. Exercise: Sequential game - Instructions 7. EXTERNALITIES Reading: - Pindyck and Rubinfeld (2015), Chapter 18. Exercise: Sequential game - Discussion of results 8. ASYMMETRIC INFORMATION Readings: - Milgrom and Roberts (1992), Chapter 5 (adverse selection). - Milgrom and Roberts (1992), Chapter 6 (moral hazard). Case: India's Alibaba: IndiaMART Network Effects 9. EMPLOYEE COMPENSATION Readings: - Brickley, Smith, and Zimmerman (2009), Chapter 14 Case: Innovation at Progressive (A): Pay-As-You-Go Insurance 10. INCENTIVE COMPENSATION Readings: - Brickley, Smith, and Zimmerman (2009), Chapter 15. Wrap-up session in preparation for final exam.
Learning activities and methodology
1. Lectures 2. Simulation games 3. Class discussions 4. Office hours 5. Individual student work 6. Student teamwork
Assessment System
  • % end-of-term-examination 50
  • % of continuous assessment (assigments, laboratory, practicals...) 50
Basic Bibliography
  • Brickley, James A.; Smith, Clifford W.; and Zimmerman, Jerold L. . Managerial Economics and Organizational Architecture. McGraw-Hill. 2016
  • Milgrom, Paul; and Roberts, John . Economics, Organization, and Management. Prentice-Hall. 1992
  • Pindyck, Robert S.; and Rubinfeld, Daniel L.. Microeconomics. Pearson. 2015
Additional Bibliography
  • Horngren, C., G. Foster y S. Datar. Cost Accounting: A Managerial Emphasis. Pearson. 2015
Detailed subject contents or complementary information about assessment system of B.T.

The course syllabus and the academic weekly planning may change due academic events or other reasons.