What limits or enhances the utilization of scarce resources in an economy or within an organization?  Under what conditions should we expect firms and persons who act in isolation to promote welfare for all? How can we facilitate coordination to promote the common good? Microeconomics addresses these questions emphasizing on how incentives and constraints shape decisions. This course introduces students to microeconomic decisions by and within firms. Firms might care only about their own profits, but they are constrained by available production technology, existing regulation, and competitors’ behavior. Decisions about pricing, market entry and investment cannot ignore how customers and competitors will react. Moreover, within the firm itself it is challenging to organize activities efficiently in the first place. The fundamental problem of economic organization within a firm is to coordinate and motivate employees to work in ways that are coherent and advance performance of the entire firm, not just each division or each employee alone. We study firms’ behavior under alternative types of competition, strategic interaction between agents with potentially conflicting interests, how to price products, contractual relationships between and within firms, and the economics of organization.

Course content

  • Competition and efficiency
  • Monopoly and price discrimination
  • Game theory and oligopoly
  • Vertical relations and contracts
  • Contract theory: asymmetric information on hidden action or hidden characteristics
  • Organizational economics and the boundaries of the firm


This is an excerpt from the complete course description for the course. If you are an active student at BI, you can find the complete course descriptions with information on eg. learning goals, learning process, curriculum and exam at portal.bi.no. We reserve the right to make changes to this description.