Consumers, Trade, and Business Strategy

Introduction

Please note that this is a preliminary course description. The final version will be published in June 2026.

The course uses consumer theory to develop a deep understanding of how budget constraints and preferences shape consumer decisions, and how trade between consumers affects a general equilibrium. It introduces students to international trade and comparative advantage and deepens their understanding of game theory (relative to the revised common course titled business economics).

The course has three broad goals. The first is understanding the basics of consumer behavior, as in the current Decisions, Strategy and Information (DSI), ending with the general equilibrium and international trade. The second goal is to understand market segmentation and imperfections. This serves as a bridge to the third goal, which is to understand how market structure and failures shape a firm’s strategy and equilibrium outcomes. 

Course content

• Preferences, budget constraints, and utility maximization

• Intertemporal choice, assets and savings + uncertainty and insurance
• General equilibrium and welfare with Edgeware box + externalities
• Production and Ricardian model of comparative advantage
• Differentiated goods and other behavioral aspects leading to market segmentation
• Dealing with other players, deepening students’ understanding of solution concepts in game theory, extending it to repeated games
• Cartels and collusion in equilibrium, ending with competition policy