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This unit examines some of the relationships between economics and business strategy. The perspective taken is that of an economist who has been asked to advise the senior managers of a firm on how to price to make a profit; the appropriate scope of the firm and the strategies to be adopted in competitive markets.
Among the topics covered are: modern positive accounts of consumer choice; the effect of the rising cost of time on the growth of national brands and the changing informational roles played by manufacturers and retailers; different forms and methods of price discrimination as a means of revenue enhancement; specific investment as an incentive mechanism to create a reputation and to discourage fraudulent seller behaviour; pre-commitment and the prevention of opportunistic behaviour by sellers; and transfer pricing.
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