Microeconomy and Corporate Analysis

Rui Baptista

 

CLASSES
1
2-3
4
5
6
7-10

Syllabus

The course covers the basics of the theory of the firm, industrial organisation and the economics of technology. The course also covers some basic issues in internet economics.

Each student will prepare and present a Term Paper that will be discussed in class - the last four classes in the course are reserved for this purpose. The term paper should analyse a technology-based company: its birth, evolution, strategies and subsequent fate. Special emphasis should be placed in the company's electronic commerce strategy. The research for the term paper should cover the characteristics and development of the company's main technology, its product range, the management team, the evolution of market structure and conditions for future growth. Among the sources for the term paper, main emphasis should be placed on the annual reports of the company and on other various statistical and financial sources on the Internet, as well as on books and other documentation available.

Home Assignments: Written essays, usually associated with mandatory readings, will be assigned throughout the course as homework.

Grading: The homework essays are assigned 30 percentage points of the total grade, the term paper is assigned 50 percent, and class discussion 20 percent.

A detailed curriculum for each class of the course is provided below.

Lecture Notes will be handed out at each class and are mandatory reading.

Other recommended readings are provided in the curriculum below.

 

Class #1 (29/04/00)

INTRODUCTION. The Evolution of the Modern Firm - Birth, Growth, and Decay of Corporations in an Environment of Turmoil.

The evolution of firms, markets, infrastructure and technology from the basic "one-factor" firm to the present-day "high-tech" corporation. Characteristics of the future corporation: outsourcing of manufacturing and of services, networking and strategic alliances. Electronic commerce and the widening of geographic markets

Readings:

  • Besanko, D., Dranove, D, and Shanley, M., Economics of Strategy, John Wiley & Sons, 1996: Chapter 1.

  • Thore, S. , The Diversity, Complexity, and Evolution of High Tech Capitalism, Kluwer Academic Publishers, 1995: Chapters 1 and 2. (Note: this book is also published on the Internet, see http://www.utexas.edu/depts/ic2/pubs/bookweb.html).

     

 

CLASSES: 1 - 2/3 - 4 - 5 - 6 - 7/10 - Top

Classes #2 and #3 (6/05/00 and 13/05/00)

MARKET STRUCTURE AND COMPETITION. A Review of Basic Economic Concepts. Firm Behaviour and Market Structure. Concentration and Rivalry, Vertical Integration and Diversification.

Basic economic concepts for the understanding of firm strategy and market structure. Product and Geographic market, Costs, Demand, Revenue, Price Elasticity, Value-added, Economic Profit. Competition, Monopoly and Market Power.

Industry concentration and the dynamics of pricing rivalry. Product differentiation strategies. The Horizontal Boundaries of the Firm: Diversification.

The Vertical Boundaries of the Firm: transactions costs and market exchange. The economics of vertical integration.

Readings:

  • Besanko, D., Dranove, D, and Shanley, M., Economics of Strategy, John Wiley & Sons, 1996: Introduction (primer) and Chapters 2-4, 6, 9, 10.

     

 

CLASSES: 1 - 2/3 - 4 - 5 - 6 - 7/10 - Top

Class #4 (27/05/00)

STRATEGIC MANAGEMENT AND INNOVATION. Product Diversity. The Sustainability of Competitive Advantage. The Concept of Product Life Cycles and the Launching of Successor Technologies. Technological and Industrial Evolution. Creative Destruction.

Managing the product line, diversification of technologies, the concept of a market niche, economies of scope, the shortening of life cycles, capture of market shares.

Product life cycles: the diffusion curve. Successive life cycles and life cycle management. Positive feedback and increasing returns in the market.

Readings:

  • Besanko, D., Dranove, D, and Shanley, M., Economics of Strategy, John Wiley & Sons, 1996: Chapters 14, 15.

  • Brian Arthur, W., "Positive Feedbacks in the Economy," Scientific American, February 1990, pp. 92-99.

  • John A. Norton and Frank M. Bass, "Evolution of Technological Generations: The Law of Capture," Sloan Management Review, Winter 1992, Volume 33, Number 2, pp. 66-77.

     

     

CLASSES: 1 - 2/3 - 4 - 5 - 6 - 7/10 - Top

Class #5 (3/06/00)

INDUSTRIAL ORGANIZATION AND THE ECONOMICS OF TECHNOLOGICAL INNOVATION. Innovation, Evolution and the Environment.

Market Structure and the Incentive to Innovate. Knowledge Spillovers and Appropriability of the Returns to R&D.

Evolutionary Economics and Firm Capabilities. Network Externalities and Firm Strategy. Economic Implications for Technology Policy.

Readings:

  • Scherer, F. M. and D. Ross, Industrial Market Structure and Economic Performance, Houghton Mifflin, 1990: Chapter 17.

  • Dosi, G., 'The Nature of the Innovative Process', in Dosi, G., Freeman, C., Nelson, R. R., Silverberg, G. and L. Soete (editors), Technical Change and Economic Theory, Pinter Publishers, 1988.

  • Geroski, P. A., 'Markets for Technology: Knowledge, Innovation and Appropriability', in Stoneman, P. (editor), Handbook of the Economics of Innovation and Technological Change, Blackwell Publishers, 1995.

  • Nelson, R. R. and L. Soete, 'Policy Conclusions', in Dosi, G., Freeman, C., Nelson, R. R., Silverberg, G. and L. Soete (editors), Technical Change and Economic Theory, Pinter Publishers, 1988.

     

 

CLASSES: 1 - 2/3 - 4 - 5 - 6 - 7/10 - Top

Class #6 (17/06/00)

BASIC ISSUES IN THE ECONOMICS OF ELECTRONIC COMMERCE. Internet economics.

Open networks and the evolution of the internet. Electronic commerce and the commercial potential of the internet. Market characteristics of electronic commerce: competition and market structure. Current issues in electronic commerce: contents and quality; copyright vs. users rights; copyright and freedom of speech; interactive advertising and the use of consumer information; internet intermediaries; security and privacy of internet transactions; pricing strategies for digital products. Taxation, regulation and economic policy issues raised by electronic commerce.

Readings:

  • Mcknight, L. W. and Bailey, J. P. (editors), Internet Economics, MIT Press, 1997.

  • Benjamin, R. and Wigand, R., 'Electronic Markets and Virtual Value Chains on the Information Highway', Sloan Management Review, Winter 1995: pp. 62-72.

  • Choi, S., Stahl, D. O. and Winston, A. B., The Economics of Electronic Commerce, Indianapolis: Macmillan Technical Publishing, 1997.

     

 

CLASSES: 1 - 2/3 - 4 - 5 - 6 - 7/10 - Top

Classes #7-#10 (24/06/00, 1/07/00, 8/07/00 and 15/07/00)

PRESENTATION AND DISCUSSION OF TERM PAPERS.

 

CLASSES: 1 - 2/3 - 4 - 5 - 6 - 7/10 - Top

 

 

 

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