Department of Economics
Syllabus
Spring Quarter, 2005
Click here for incentive
conflicts lecture
I. BASIC
INFORMATION
Course: EC
401-01 - Managerial Economics
9:45-10:50 -
MWF - 021 Rike Hall
Instructor: Dr. John P. Blair
Office: 260-B
Rike Hall
Phone: 775-3484/775-3070
Office Hours: 9:00-9:45 - MWF, &
5:30-6:00 p.m. - M
Textbook: Managerial Economics and Organizational Architecture,
3rd edition
by
Brickley, Smith, and Zimmerman (BSZ)
Irwin
& McGraw Hill,
II. PREREQUISITES
EC 201, EC 202, EC 203 or EC 204, EC 205
III.
COURSE REQUIREMENTS
This course is intended to make economic
theory practical, particularly to future managers. Its objective is to help you see how some
simple economic principles can be used to address management concerns. I am starting with the assumption that the
basic theory you learned in EC 201, 202, and 203 or EC 204 and EC 205 can be
refreshed quickly, on your own. We will
not spend much class time on review.
Attendance is expected and can be used to determine your grade.
IV. Two exams and
class participation will determine your grade as follows:
Exam
1 - 30%
Exam
2 - 30%
Final
Exam - 30%
Participation
- 10%
Grades are based on a 90%, 80%,
70%....scale. The test will be short
answer questions. The back of chapter
questions and my lectures will be good sources of information about what will
be on the test.
V. MODE
OF INSTRUCTION
Lecture/Discussion (emphasis on
discussion).
VI. ASSIGNMENTS
Week of: Topic Chapters
1.
March 28 BSZ
A. Introduction
B. Organizational Architecture
Three
Legs
Economic
Darwinism
Benchmarking
C. Economist’s View of Behavior
Alternative
Models
Which
Model is Best
Decision
Making w/Uncertainty
D.
Property Rights
The
Role of Property Rights
Property
Rights, Value and Information
Externalities
and The Coase Theorem
Specific
and General Knowledge
Contracting
Costs
2. April 4
A. The Old Demand Curve Again BSZ ch. 3, 5
Review
of Basics - - Law of Demand, other things equal.
Elasticity
and Total Revenue
The
Identification Problem
Determinants
of Elasticity
Demand
Estimation
B. Production and Costs
Returns
to Scale vs. Returns to a Fixed Factor
Choice
of Inputs MPa/Pa = MPb/Pb... = 1
Cost
Curves Again
The
Demand for a Factor of Production
4. April
11 BSZ
A. The Competitive Equilibrium: MC = MR = P = AR
Long
and Short Run
Strategic
Considerations and
A
Mathematical Solution to Determine Output
B. The Shut Down Point
C. Exam
5.
April 18
A.
Monopoly and Monopolistic
Competition BSZ Con’t
D
> MR
Barriers
to Entry
Calculating
MR from Demand
What
is “The Market”
D. Oligopoly Pricing
Strategic
Behavior
American
Capitalism
The
Prisoner’s Dilemma
5. April
25 BSZ
A. Pricing Cp.
Pricing
Goals
The
Competitive Firm
B. The Monopoly and Monopolistic Competitive
Cases
- - Homogeneous Consumer Demand
Block
Pricing
Two
Part Tariffs
Price
Discrimination - - Heterogeneous Consumer Demand
Group
Pricing
Menu
Pricing
Bundling
6. May
2 BSZ
A. Creating and Capturing Value
Ways
to Create Value
Ways
to Capture Value
Economics
of Diversification
B. Incentive Conflicts and Contracts
Intro
Firm Conflicts
Pre
and Post Contracting Problems
C. Exam 2
7. May
9 BSZ
A. Organizational Architecture & pp 462-472
The
Problem: Information and Incentives
Architecture
of Firms and Markets
Determinants
When
Architectures Fail
B. Decision Rights and Level of Empowerment
Centralization
vs. Decentralization
Costs
and Benefits of Team Decision Making
C. Bundling Tasks to Jobs
Specialized
vs. Broad Task Assignments
Creating
Subunits
Matrix
Organizations
Recent
Trends
D. Transfer Pricing
8. May
16 BSZ
A. The Job Market
The New-Classical
Perspective
Compensating
Differentials
The
Efficient Wage
Internal
Labor Markets
The
Salary-Fringe Benefit Mix
B. Incentive Compensation
The
Agency Problem Again
Risk
Sharing
Effective
Incentive Contracts
Informativeness
Principle
C. Individual Performance Evaluation
Setting
Performance Bench Marks
Opportunism
Tip
9. May
23 BSZ
A. Vertical Integration & Outsourcing
B. Economics of Regulation
10.
May 30-June 3 A. No Class May 30
B. Review, etc.
June 8 Final
Exam - 8:30-10:30 a.m. (Wednesday)