Economic Analysis & Policy Group

Competitive and Corporate Strategy is a course in management. It is designed to acquaint the student with delineation of business policy by the firm, and the development and implementation of a business strategy that will allow the firm to achieve its goals and objectives. The pursuit of these goals and objectives usually occurs within a competitive context, in which other rival organizations often seek similar if not the same ends (e.g., market share, profits, control of scarce resources, etc.). Accordingly, the essential drama of the marketplace is how one firm attempts to "win" vis-a-vis its rivals-- that is, how it develops and implements a competitive strategy.

The basic perspective of the course will be that of the "general manager" of the firm, or that person charged with overall responsibility for competitive performance. We shall apply the concepts of the course to firms that compete in single businesses as well as multiple lines of activity, to firms that compete in domestic markets as well as international venues, and to firms that engage in production sector activity as well as the service sector of the economy. Finally, while this course is not specifically concerned with high-technology markets, it will make reference to this sector, as well as more mature and traditional industries.

Business success depends upon strategy, structure, and incentives. The focus here is on using insights from economics to develop structure, tactics, and incentives to achieve the firm's goals. Competitive advantage is achieved through the management of the firm’s resources, as well as those of upstream suppliers, network and alliance partners, and downstream distributors. We develop a framework for analyzing organizational architecture, focusing on the allocation of decision rights, the measurement of performance, and the design of incentives. We focus on managing the vertical chain of upstream suppliers and downstream distributors, including the fundamental make or buy decisions that determine the limits of the firm. Our discussion links the competitive landscape to the firm’s external and internal strategic decisions. We also examine techniques for dealing with informational asymmetries. A major focus of this course is the design and operation of incentive and performance management systems both within the firm and in external contracts.

Competitive strategy focuses on the strategic interactions among competitors in dynamic business environments. In this course, we will assume a senior-executive perspective on the management of organizations with the intent of improving your strategic decision-making skills. We will use basic applied economic perspectives to examine strategic decision-making in both competitive and cooperative settings. You will learn the analytical tools used by firms to examine the ways in which companies can interpret and anticipate strategic actions among competitors. With these tools, you will be able to analyze the rational and irrational behaviors displayed in strategic interactions over time.

The course will address questions such as: What determines the balance of power in an industry? Why is the timing of market entry critical? How can companies use signaling to their competitive advantage? How can competitive bidding situations be turned in one company's favor? How do firms use tacit collusion to influence the profitability of their firms and of their competitors?

This course will encourage you to develop a dynamic, interactive view of organizations – a view in which competitors do not sit idly by while you carry out your strategy (they react!). This course is relevant to any student who anticipates eventually becoming involved in the strategic decision-making of organizations either as consultants or as executives.

This course is oriented towards examining real world puzzles in domestic and international macroeconomic events and policies. We will construct simple models to analyze these puzzles and, hopefully, shed light on the interactions of the various sectors of the economy that contribute to this behavior. The goal of this course is to enable you to analyze macroeconomic phenomena in a structured manner, and to express this analysis in a coherent way. This model building approach provides a cohesive framework for understanding the factors and policies that influence output, unemployment, interest rates, exchange rates, and inflation. We will use this framework to discuss how theory can be used to evaluate strategic business decisions that are influenced by changes in the macro economy through class projects and current events.

Class meetings are intended to be informal lectures. As the material we cover is often difficult, and we cover it fairly quickly, it is advisable that you come to each class prepared. This will not only help you to follow the lectures more easily, but will be appreciated by both the instructor and your fellow students. The techniques we use are primarily geometric, although some algebra will be used in the models.

We will discuss basic techniques in Game Theory with special emphasis on bargaining and negotiations. We will play some games and perform some experiments in class so the student “feels” the theory. The course will help students identify the sources of conflict, the strategic advantages available and ways to strengthen positions in the negotiation process.

The last 25 years have witnessed a large increase in the volume of international trade and investment, significant treaties reducing barriers to trade and capital movements, and the development of regional trading blocs. Recently, however, we have witnessed a rise in sentiment against international trade and globalization. We construct models to analyze international trade and shed light on the underlying economic, social, and political factors that affect trade patterns. A significant part of the course is devoted to evaluating the theoretical models in light of empirical research. The goal is to enable you to understand current political debates on trade and protection in a structured manner and to express your analysis in a coherent way.