Managerial Economics
Tools for Analyzing Business Strategy
by Thomas J. Webster
1st Edition
Publisher: Lexington Books
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Book Details
| Print ISBN | 9781498507936 |
| eText ISBN | 9781498507943 |
| Publisher | Lexington Books |
| Publishing Year | 2014 |
| Edition | 1st Edition |
| Language | English |
| Pages | 442 |
Managerial Economics: Tools for Analyzing Business Strategy, 1st Edition, presents an applied economic framework for evaluating business decisions. The textbook defines managerial economics as the application of economic principles to topics that concern managers, helping readers anticipate executive responses to shifts in the business environment.
To identify optimal solutions for organizational objectives, the text links business disciplines with quantitative methods. Core topics encompass demand and supply analysis, elasticity, production and cost relationships, and market structures ranging from perfect competition to monopoly.
Designed for students with prior preparation in business mathematics and the principles of microeconomics, the work also serves a broader scholarly and professional audience.
Table of Contents
Chapter 1: Managerial Economics and Strategy
- • The role of economics in business management
- • What is economics?
- • What is managerial economics?
- • Strategic behavior
- • Quantitative methods
- • The role of a manager
- • The role of profit
- • The objective of the firm
- • What’s a company worth?
- • Types of profit
- • Constraints on the operations of the firm
- • Conflicts of interest
- • Other players
- • Thinking at the margin
- • Deriving marginal from total values
- • Chapter exercises
Chapter 2: Demand and Supply
- • Demand
- • Income and substitution effects
- • Demand determinants
- • Estimating the market demand equation
- • Consumer surplus
- • Supply
- • Supply determinants
- • Producer surplus
- • Market Equilibrium
- • Net Social Welfare
- • Changes in Demand and Supply: Price and Output Determination
- • Demand shifts
- • Demand and supply shifts
- • Rationing Function of Prices
- • Price ceilings
- • Price floors
- • Allocating Function of Prices
- • Chapter exercises
Chapter 3: Elasticity
- • Price Elasticity of Demand
- • Calculating the price elasticity of demand
- • Definitions
- • Determinants of the price elasticity of demand
- • Total and marginal revenue
- • Formal relationship between the price elasticity of demand and total revenue
- • Income Elasticity of Demand
- • Cross-Price Elasticity of Demand
- • Advertising Elasticity of Demand
- • Chapter exercises
Chapter 4: Production and Cost
- • The Production Function
- • Production relationships
- • Productivity Measures
- • Average and marginal products of a variable input
- • Law of Diminishing Returns
- • Isoquants
- • Cost in the Short Run
- • Total cost
- • Average and marginal costs
- • Functional form of the total cost equation
- • Isocost Line
- • Learning Curve Effect
- • Cost in the Long Run
- • Economies and diseconomies of scale
- • Sources of economies of scale
- • Sources of diseconomies of scale
- • Multiproduct Cost Functions
- • Economies of scope
- • Cost complementarities
- • Chapter Exercises
Chapter 5: Profit Maximization
- • Profit Maximization
- • Optimal input combinations
- • Maximizing profit in practice
- • Optimal input substitution
- • How to Procure Inputs
- • Spot exchange
- • Contracts
- • Vertical integration
- • Specialized Investments
- • Types of specialized investment
- • Bargaining costs
- • Underinvestment
- • Opportunism
- • Procuring Inputs Involving Specialized Investments
- • Promoting Maximum Effort: The Principal-Agent Problem
- • Owner-manager principal-agent problem
- • Manager-worker principal-agent problem
- • Chapter Exercises
Chapter 6: Corporate Structure and Culture
- • The Supply Chain
- • Transaction costs
- • Vertical Integration
- • Horizontal Integration
- • Economies of scale
- • Economies of scope
- • Diversification
- • Economies of scale and scope
- • Lower transactions costs
- • Smoother cash flows
- • Internal financing
- • Diversifying shareholder investment
- • Undervalued firms
- • Strategic Alliances
- • Firm Architecture
- • Evolution of the modern corporation
- • Organizational Structure
- • Types of Organizational Structure
- • Unitary (functional) form (u-form)
- • Multidivisional form (m-form)
- • U-form/M-form hybrid
- • Matrix structure
- • Contractual network
- • Strategy or Structure: Chicken or Egg?
- • Corporate Culture
- • Unwritten rules
- • Creating a corporate culture
- • Chapter Exercises
Chapter 7: Industry Organization
- • Market Structure
- • Number, size, and distribution of rival firms
- • Number, size, and distribution of buyers
- • Product differentiation
- • Entry and exit conditions
- • The Five Forces
- • Threat of entry
- • Threat of substitutes
- • Competitive rivalry
- • Bargaining power of buyers
- • Bargaining power of suppliers
- • Industry Types
- • Perfect competition
- • Imperfect competition
- • Monopoly
- • Industrial Concentration
- • Concentration ratios
- • Herfindahl-Hirschman index
- • Market Power and Pricing
- • Lerner index
- • Rothschild index
- • Profitability
- • Variations in profits across firms and industries
- • Other Criteria for Classifying Industries
- • Production technology
- • Nature of market demand
- • Degree of industrial integration
- • Research and development
- • Chapter Exercises
Chapter 8: Perfect Competition and Monopoly
- • Perfect Competition
- • Short-run perfectly competitive equilibrium
- • Economic losses and shutdown
- • Long-run perfectly competitive equilibrium
- • Monopoly
- • Sources of monopoly power
- • Barriers to entry
- • Welfare implications of monopoly
- • Landmark U.S. Antitrust Legislation
- • Sherman Act (1890)
- • Clayton Act (1914)
- • Federal Trade Commission Act (1914)
- • Willis-Graham Act (1921)
- • Robinson-Patman Act (1936)
- • Wheeler-Lea Act (1938)
- • Celler-Kefauver Act (1950)
- • Hart-Scott-Rodino Act (1980)
- • Contestable Markets
- • Chapter Exercises
Chapter 9: Imperfect Competition
- • Oligopoly
- • Oligopoly Models
- • Cournot model
- • Stackelberg model
- • Bertrand model
- • Bertrand paradox
- • Collusion
- • Comparing oligopoly models
- • Monopolistic Competition
- • Short-run profit-maximizing price and output
- • Long-run profit-maximizing price and output
- • Advertising and product differentiation
- • Product Differentiation and Strategic Behavior
- • Chapter Exercises
Chapter 10: Thinking Strategically
- • What is Game Theory?
- • Lexicon of game theory
- • Rational versus actual behavior
- • Static Games
- • Nash equilibrium
- • Secure strategy
- • Mixed Strategies
- • Cooperation
- • Finitely-repeated static games
- • Tit-for-tat
- • Infinitely-repeated static games
- • Evaluating payoffs in infinitely-repeated games
- • Dynamic Games
- • Subgame perfection
- • Backward induction
- • First-mover advantage
- • Chapter Exercises
Chapter 11: Pricing Strategies
- • Standard Pricing Rule
- • Extracting consumer surplus
- • First-degree price discrimination
- • Second-degree price discrimination
- • Third-degree price discrimination
- • Special Pricing Practices
- • Capacity peak-load pricing
- • Multiproduct pricing
- • Non-Marginal Pricing
- • Cost-plus pricing
- • Price fixing
- • Price matching
- • Most-favored customer
- • Price leadership
- • Penetration pricing
- • Transfer Pricing
- • No external market
- • Perfectly competitive external market
- • Entry Deterrence
- • Limit pricing
- • Chapter Exercises
Chapter 12: Bargaining
- • The Bargaining Problem
- • Nash Bargaining
- • Rubenstein Bargaining
- • Last-mover advantage
- • Symmetric impatience
- • Asymmetric impatience
- • Chapter Exercises
Chapter 13: Economics of Information
- • Risk and Uncertainty
- • Mean
- • Variance
- • Standard deviation
- • Static Games with Uncertain Payoffs
- • Attitudes toward Risk
- • Risk aversion
- • Understanding risk-averse behavior
- • Managing Risk
- • Diversification
- • Options contracts
- • Uncertainty and Search Costs
- • Dynamic Games with Uncertain Payoffs
- • Bayesian updating
- • Asymmetric Information
- • Adverse selection
- • Moral hazard
- • Separating and pooling strategies
- • Screening
- • Chapter Exercises
Chapter 14: Contracts
- • Contracting Environment
- • Contracting Phase
- • Implementation Phase
- • Self-enforcement
- • External enforcement
- • Breach Remedies
- • Expectation damages
- • Reliance damages
- • Restitution damages
- • Chapter Exercises
Chapter 15: Auctions
- • Auctions and the Internet
- • Types of Auctions
- • Information Structures
- • Incomplete-Information Auctions with Independent Private Values
- • Sealed-bid, first-price auction
- • Sealed-bid, second-price auction
- • English auction
- • Dutch auction
- • Expected revenues from incomplete-information auctions with independent private values
- • Incomplete-Information Auctions with Correlated Value Estimates
- • Common-value auctions and the winner’s curse
- • Incomplete-Information Auctions and Risk Aversion
- • Chapter Exercises
Chapter 16: Networks
- • Evolutionary Game Theory
- • Reproductive success
- • Evolutionary equilibrium
- • Networks
- • Positive feedback effects
- • Network game
- • Implications
- • Restraint of Trade in Network Industries
- • Bottlenecks
- • Technical standards
- • B2B exchanges
- • Chapter Exercises
Chapter Appendix: Regression Analysis
- • Estimation
- • Diagnostics
- • Confidence intervals
- • t-statistic
- • p-value
- • Coefficient of determination
- • Adjusted coefficient of determination
- • Respecifying the regression equation
Chapter Glossary: Glossary
Chapter References: References
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