Economics 696.

01
Managerial Economics and Strategy
Fall Semester 2016
"Economic progress, in capitalist society, means turmoil.
-- Joseph A. Schumpeter
Instructor:

Phillip L. Hampton

Office:

Room M2800, Management Education Center, 1300 Harmon Place

Mailing address: 1501 Hennepin Ave. Minneapolis, MN 55403-1710

Office Hours:

By appointment

Messages:

phillip.hampton@metrostate.edu

Textbook:

Economics of Strategy by David Besanko et al., 6th Edition, John Wiley &
Sons, Inc.

Assignments &
Evaluation:

Grades will be based on three short papers. Refer to the Course

Assessment section for details.

Course Description: This is a master level course in managerial economics and, in particular,
strategic economic analysis of firms and markets. A basic understanding of microeconomics is
assumed. Principles-level economic concepts are used to analyze the structure and behavior
of firms in a variety of market conditions. Topics discussed include the definition of a firm and
explanations for horizontal and vertical expansion, transactions costs, competition, strategic
commitment, issues in oligopoly behavior, the principal-agent problem and industry analysis.
Real world applications of these topics will be the focus of the course.
Course Objectives: The purpose of this course is to present you with an organized economic
framework for analyzing managerial and strategic decisions and to allow you to demonstrate
mastery of this framework through its application to a business or industry with which you are
familiar.
After completing this course, you should be able to apply economic concepts in a managerial and
strategic context to decisions or situations such as:
Make or buy decisions
Understanding the importance of economies of scale and scope, when they apply and when they
may fail
Identifying important industry characteristics and their implications for the behavior of firms within
the industry and the potential for long run profitability
Structuring contracts and compensation agreements
While the course will rely on analytical techniques typically used in economics, the focus will be on
practical applications and real world situations.

Students requesting accommodations for disabilities must register with the Office for Disabilities and
Special Services (651-793-1540) as early as possible. If you have a documented learning disability,
or if you suspect you have a learning disability which may impact your opportunity to succeed in this
course, call the Office for Disabilities and Special Services right away so that you can explore
possible ways to reasonably accommodate your learning style.
Note: This is a seven (7) week course.
Class Schedule
Note: this is a general outline of the material that will be covered each week.
Due dates for the paper assignments are as follows:
Paper 1 due Monday, September 12 11:59 p.m.
Paper 2 due Monday, September 26 11:59 p.m.
Paper 3 due Monday, October 10 11:59 p.m.
Each module includes one or more chapters. I have assembled supplementary notes and review
questions for each chapter. These will be posted in D2L as they are available.
So, ideally, the schedule for each module would be as follows:
1. Read the chapters and notes
2. Complete the questions for the chapters to the extent you feel necessary
3. Ask questions.
4. Write the paper for the module and submit it in the D2L dropbox (although there are 5 modules
there are 3 papers, not 5.)
Modules 1 and 2: Horizontal and Vertical Boundaries, 8/22-9/12
Chapter 1: The Power of Principles: An Historical Perspective
Chapter 2: The Horizontal Boundaries of the Firm
Chapter 3: The Vertical Boundaries of the Firm
Chapter 4: Integration and Its Alternatives
Paper 1 due September 12 11:59 p.m.
Modules 3 and 4: Competition and Strategic Commitment and Industry Analysis 9/13-9/26
Chapter 5: Competitors and Competition
Chapter 7: Dynamics: Competing Across Time
Chapter 6: Entry and Exit
Chapter 8: Industry Analysis
Chapter 11: Sustaining Competitive Advantage
Paper 2 due September 26 11:59 p.m.
Module 5: Issues in Agency, 9/27-10/10
Chapter 12: Performance Measurement and Incentives
Paper 3 due October 10 11:59 p.m.

Student Responsibilities
Students have the following responsibilities in this course:
Read the indicated chapters from the textbook
Read the associated lecture notes and exercises
Write the three required papers by the posted deadlines
Students are responsible for their own conduct. Students are expected to cite sources for all
reference materials and to work with the Metropolitan State University Library to secure
copyright permissions for all content used in their actual courses.
As part of academic honesty, students are expected to respect intellectual property laws, including
copyright law. No parts of this site, your textbook, other publisher materials, or contributions
from other class members can be used or distributed outside of this class without the
permission of the author(s). Copyright law provides that any creative thought fixed into a
tangible form is copyrighted the moment it is created, whether or not a copyright notice is
affixed.
You are expected to treat your instructor and all other participants in the course with courtesy and
respect. Unprofessional or disrespectful conduct will result in a lower grade on an assignment.
Warnings will not be given; part of the learning process in this course is respectful engagement
of ideas with others.
Students will need to contribute in intelligent, positive, and constructive manners within the course.
Behaviors that are abusive, disruptive, or harassing may result in disciplinary actions as
specified within the Student Conduct Code (University Policy #1020).
Instructor Responsibilities
The instructor will respond to students emails and discussion board postings (when appropriate or
necessary) within two working days. Papers should be graded and returned within one week
of the submission deadline.
Just as students are expected to treat all participants in the course with respect, so too will the
instructor demonstrate respect for students comments, questions and contributions to the
course.
Resources
The textbook for this course is Economics of Strategy, 6th edition, by David Besanko, et al, published
by John Wiley & Sons, Inc.
There are notes intended to accompany the relevant chapters from the textbook. These notes cover
the topics I would usually discuss in lectures accompanying the chapters of the text. They may
offer alternate explanations or additional examples of topics discussed in the text or may serve
to emphasize what I believe to be the more important topics discussed. The notes are very
much a complement to rather than a substitute for the textbook chapters.
There are also review questions accompanying each chapter. These questions are intended to allow
you to assess your understanding of the material covered in the chapter. Answers are
provided and these questions will not be submitted or graded.

Additional Chapters
You will notice that a number of chapters from the book are not explicitly included in the syllabus, and
that these may be the chapters with the most provocative titles. The exclusion of these
chapters from the material included in this course is no indication of the value of their content.
I would be happy to discuss privately or through a message board the issues discussed in
these chapters. Despite the fact that they are not explicitly included in this course, I strongly
encourage you to read and consider the material in these chapters.
Course Assessment
Grades in this course will be based on your three papers, which will be submitted electronically. The
papers ask you to apply the concepts discussed at various points in the course to an industry
with which you are particularly familiar. You should take some time to consider an industry
about which you would like to write a number of papers. While I will not prohibit people from
changing industries mid-course, the final product of this course, your set of papers, will be
stronger if you concentrate on one topic industry. The goal of these papers is appropriate
application of the concepts discussed in the course. Some research may be necessary to
support your claims, but it is my hope that this can be kept to a minimum. The grades on the
papers will constitute 100% of the final grade.
Scoring of the papers will be based on the quality of the background description describing the firm or
organization and the topic to be discussed (25%), clear and correct application of the concepts
discussed in that section of the course (50%) and the quality of writing (25%). I expect writing
in these papers to be concise, well organized and free from technical problems such as
misspelled words and incomplete sentences. I would recommend the services of the
universitys writing center to any student who has concerns about his or her writing.
Here is a general rubric for scoring and for assigning grades on these papers. Scoring may be either
between or below the point levels described here depending on the instructors assessment of
the paper.
Background Description 5 points maximum
5 points A clear, concise and informative description of the firm and the industry that puts the
discussion into a historical context and builds interest and excitement in the reader and
exceeds expectations.
3.5 points A description of the firm and perhaps the industry that is accurate and informative and
well organized and sets the stage for the analysis to be presented and meets expectations.
2 points A vague description of the firm or situation that fails to fully inform or clarify and does not
meet reasonable expectations.
Application of Concepts 10 points maximum
10 points A correct, clear and novel or innovative application of several of the main concepts of the
module that approaches the situation or the concepts in non-obvious or particularly creative
ways and yields either good strategic suggestions or criticisms and whose quality exceeds
expectations.
7 points A correct and clear application of several concepts from the module that provides some
commentary on an actual or proposed strategic move and whose quality meets expectations.
4 points A correct, straightforward and reasonably clear application of one concept from the module
that demonstrates some understanding of the topic but does not meet expectations consistent
with this course level.
4

Quality of Writing 5 points maximum

5 points Clear, well organized, concise and perfectly clean writing. Very easy to read. Beautifully
structured, distinct and well focused paragraphs. Exceeds expectations.
3.5 points Generally clear and well organized writing that is largely free from technical mistakes and
is reasonably concise and meets expectations.
2 points Some confusing sentences that are either ambiguous or incomplete. Numerous technical
errors and misused words. Fails to meet expectations for writing at this level.
Each paper will be scored. At the end of the semester, the students three paper scores will be
averaged and a grade for these papers will be assigned based on the following schedule:
A
AB+
B
BC+
C

17.5 20 points
15 17.5 points
12.5 15 points
11 12.5 points
9.5 11 points
8.5 9.5 points
7.5 8.5 points

A paper that meets but does not exceed my expectations in each of the three areas will usually
receive a score of 14 points, which is consistent with a grade of B+.
Papers will be returned with comments via the dropbox. Comments on earlier papers will help you in
your preparation of later papers.
DEADLINES/RULES
1. Papers will be completed and submitted through the courses D2L dropbox by the time and date
indicated in this syllabus.
2. Extra credit assignments are not offered.
3. Incompletes must be arranged with me prior to the last day of class and will conform to official
university policy. A grade of incomplete may be considered if the person requesting has
successfully completed at least half of the course and is a student in good standing in the
course. Good standing means the requester is earning a passing grade (C- or better) and
has attended class regularly. I reserve the right to refuse a request for an incomplete.
4. The deadline for dropping this course and requesting a refund is 9/1/14. The deadline for
withdrawing without a refund is 10/03.

Plagiarism
Plagiarism is a serious matter that will not be treated lightly. Possible sanctions include warning,
course failure or grade change, probation, suspension or expulsion. The following is an excerpt
from the Student Handbook
(http://www.metrostate.edu/msweb/pathway/gateway/handbook/handbook.html#Plagiarism)
Plagiarism
In simple terms, plagiarism is using another persons words or ideas and presenting them as
your own, without acknowledging the original source. This is a very serious offense and
qualifies as grounds for expulsion*.
Plagiarism often takes the form of a student copying information from one source and
presenting it in a paper or report without the use of footnotes or direct mention of the source
in the body of the paper. Naturally, students are expected to read and use a variety of
sources when writing a paper, but when the exact words (or words with slight
modification) or ideas of others are used, the sources should be properly
acknowledged. When instructors read student papers, they want to know which ideas
are the students and which belong to other sources.
It is also unacceptable to submit another persons paper or examination as your own.
You should be aware that the university scribes to plagiarism detection software, and that
your papers may be selected randomly for plagiarism checking. In instances of plagiarism,
instructors may impose sanctions such as a failing grade. If you have questions about the
use of footnotes or other notations, talk to your instructor, consult the Library and Information
Services web site, or seek assistance in the proper way of writing a paper by contacting the
Writing Center.
Allegations of plagiarism are also subject to investigation and additional conduct sanctions
under the Student Conduct Code Policy #1020 and Procedure #112. If you have questions
about the use of footnotes or other notations, talk to your instructor, consult the Library and
Information Services website, or seek assistance in the proper way of writing a paper by
contacting the Writing Center.
* Additional information on expulsion is included in the Student Conduct Code.