Real-world decision making is characterized by an interplay between individual incentives and constraints. Firms might aim to do what is best for themselves, but are constrained by their available production technology, existing rules, and by the behavior of their competitors. Decisions about pricing, market entry, investment, and research and development cannot be made without an assesment of how customers and competitors will react. This course introduces students to the basic microeconomic tools needed to systematically analyze economic decision making. Focus is on the consequences of alternative types of competition, strategic interaction between agents with conflicting interests, alternative ways to price products, and contractual relationships between firms, with particular emphasis on vertical mergers. We also analyze questions related to research and development and strategic issues in international trade.
- Competition and efficiency
- Monopoly pricing and price discrimination
- Game theory
- Horizontal and vertical relations and contracts
- Research and development
- Strategic issues in international trade
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