BSc International Business, Finance and Economics with Industrial/Professional Experience / Course details

Year of entry: 2020

Course unit details:
Business Economics II

Unit code ECON30821
Credit rating 20
Unit level Level 3
Teaching period(s) Semester 1
Offered by Economics
Available as a free choice unit? Yes

Overview

Aims

The course will provide students with the economic tools required to study strategic behaviour of firms in imperfectly competitive industries. These skills will be applied to certain aspects of firms’ behaviour (in particular, product differentiation, price discrimination, collusion and information use). Psychological aspects of business decision-making will also be analysed, by looking at behavioural biases of consumers, employees and managers. The primary goal of the course is to show how simple economic tools can be used to shed light on business decisions – a valuable skill for careers in both the public and private sectors, and in research.

Intended Learning Outcomes

At the end of this course, students should be able to demonstrate their understanding of (i) oligopoly theory and its application to strategic behaviour of firms; (ii) behavioural economics and its application to business decision-making. 

Pre/co-requisites

Unit title Unit code Requirement type Description
Microeconomic Analysis 3 ECON30501 Pre-Requisite Compulsory
Microeconomic Analysis 3 ECON20501 Pre-Requisite Compulsory
Microeconomics 3 ECON30021 Pre-Requisite Compulsory
Microeconomics 3 ECON20021 Pre-Requisite Compulsory
Introductory Mathematics ECON10061 Pre-Requisite Compulsory
Advanced Mathematics ECON10071 Pre-Requisite Compulsory
(ECON30501 or ECON20501 or ECON30021 or ECON20021 or ECON20312 or ECON2001) and (ECON10061 or ECON10071)

(ECON30501 Macro Analysis 3 or ECON20501 Micro Analysis 3 or ECON30021 Macro 3 or ECON20021 Micro 3 or ECON20312 Business Econ 1 or ECON20001 Managerial Econs) and (ECON10061 Intro Maths or ECON10071 Adv Maths)

Aims

The course will provide students with the economic tools required to study strategic behaviour of firms in imperfectly competitive industries. These skills will be applied to certain aspects of firms’ behaviour (in particular, product differentiation, price discrimination, collusion and information use). Psychological aspects of business decision-making will also be analysed, by looking at behavioural biases of consumers, employees and managers. The primary goal of the course is to show how simple economic tools can be used to shed light on business decisions - a valuable skill for careers in both the public and private sectors, and in research.

Learning outcomes

At the end of this course, students should be able to demonstrate their understanding of (i) oligopoly theory and its application to strategic behaviour of firms; (ii) behavioural economics and its application to business decision-making.

Syllabus

Topic 1. Competition

This topic introduces the models from oligopoly theory which describe how businesses compete in quantity, price and product characteristics. The models studied include Bertrand, Cournot and Hotelling.

Topic 2. Strategic Behaviour of Firms

This topic explores business strategies aimed at maximising profits in oligopolistic markets. It starts by analysing price discrimination, and then studies cooperative and non-cooperative strategic behaviour.

Topic 3. Information

This topic looks at problems which arise from asymmetric information. First, situations where a firm is a better-informed party are considered (such as the market for “lemons”). Second, information use by business themselves are analysed, where firms may be a less-informed party.

Topic 4. Behavioural Economics for Businesses

This topic explores behavioural biases in consumers, employees and managers. Cognitive limitations, as well as emotional and social influences are considered and their implications for business decision-making is studied.

Teaching and learning methods

Lectures and exercise classes.

Employability skills

Analytical skills
Synthesis and analysis of data and information.
Problem solving
Research
Planning, conducting and reporting on research
Other
Using library, electronic and online resources. Numeracy. Literacy. Computer literacy. Time management. Applying subject knowledge. Improving own learning.

Assessment methods

20%      Take home test

80%      Exam

Feedback methods

  • Mock exam.
  • Online quizzes.
  • Class feedback.
  • Office hours.
  • Revision sessions.
  • Discussion boards.

Recommended reading

Core reading:

Carlton, D. and Perloff, J. (2015). Modern Industrial Organization (4th ed.; global ed.).

Additional readings:

Chapter 3 in Monahan K. (2018). How Behavioral Economics Influences Management Decision-Making.

Benabou R. and Tirole J. (2009). Individual and Social Corporate Responsibility.

Laibson, D. (1997). Golden eggs and hyperbolic discounting. The Quarterly Journal of Economics, 443-477.

Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 263-291.

Further readings will be indicated by on the module Blackboard website.
 

Study hours

Independent study hours
Independent study 0

Teaching staff

Staff member Role
Maria Kozlovskaya Unit coordinator

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