Business Economics

Introduction

How do incentives and constraints shape decisions by and within firms, and when do those decisions serve the common good? Firms pursue their own profits, but operate under the constraints of technology, regulation, competitors' behavior, and the reactions of customers. Within the firm, a parallel challenge arises: coordinating and motivating employees so that divisions and individuals advance the performance of the firm as a whole. The course studies firm behavior under different forms of competition, strategic interaction between agents with conflicting interests, pricing, contractual relationships between and within firms, and the economics of organization.

Firms' choices also carry consequences beyond their own profits and immediate partners — for consumers and competitors, or for the environment through externalities such as pollution. The course applies a single economic toolkit — incentives, constraints, and strategic interaction — to examine both firm performance and these broader societal effects, and to assess the role of regulation, contracts, and governance in aligning private decisions with social outcomes.

Course content

• Market power and pricing
• Competition & market analysis
• Strategic decision-making
• Contracts, ownership and business-to-business relations
• Corporate governance and the boundaries of the firm
• Asymmetric information: hidden action and hidden characteristics
• Managerial and personnel economics
• Externalities, regulation, and corporate social responsibility: shareholder vs. stakeholder perspectives
• Ethical and responsible management decisions: collusion, moral hazard in finance, and the limits of pay-for-performance

Disclaimer

This is an excerpt from the complete course description for the course. If you are an active student at BI, you can find the complete course descriptions with information on eg. learning goals, learning process, curriculum and exam at portal.bi.no. We reserve the right to make changes to this description.