Facoltà di Economia

Aggiornato A.A. 2015-2016

Microeconomics for business 

The course provides a basic overview of fundamental microeconomic questions in the contemporary economic debate. It is divided in two parts: the first one proposes some basic game theoretical tools to analyze relevant firms’ decisions in production economies. The second part investigates how information influences economic decisions and outcomes, with particular attention to the financial aspects of firm’s activities. Topics include moral hazard and adverse selection in static frameworks. Each model’s result will be discussed in the light of relevant economic examples.

Course programme
Strategic decision: Game Theory (Gibbons)

• Normal form games: Nash equilibrium
• Application 1: Cournot Oligopoly
• Application 2: Bertrand duopoly with imperfect substitutes
• Application 3: Bertrand duopoly with a homogeneous good
• Mixed strategy equilibria.
• Extensive form games: Subgame Perfect Nash Equilibrium
• Application 1: Stackelberg oligopoly
• Application 2: Diamond-Dybvig economy
• Application 3: Entry games
• Subgame Perfect Nash Equilibrium in mixed strategies

Monopoly pricing (Tirole)

• Linear demand derived from individual preferences
• Monopoly with a linear tariff: positive and normative analysis
• Alternative pricing rules for firms with market power: linear, two-part and non-linear tariffs. 
• Price discrimination by a monopolist: the case of homogeneous consumers and symmetric information
• Price discrimination by a monopolist: the case of heterogenoues consumers and symmetric information
• Price discrimination by a monopolist: the case of asymmetric information
• Introduction to Principal-Agent models

References
Gibbons R., (1992)  “A primer in Game Theory”, Harvester Wheatsheaf.
Tirole, J. (1997) "The Theory of Industrial Organization", MIT Press.

Supplementary readings

Salaniè B., (2005) "The Economics of Contratcs. A primer", MIT Press.
Preston McAfee (2006), Lectures on pricing, California Institute of Technology, freely downloadable.

Dixit A. and Nalebuff B., (1991) Thinking Strategically: The Competitive Edge in Business, Politics and Everyday Life, Norton.

Van Zandt T. (2012), Firms Prices and Markets, freely downloadable online.

Additional supplementary readings will be indicated as the course goes on. The course instructor will provide indications to download articles, and pdf of the article whenever possible.
As a general reference for any prerequisite in microeconomics: Varian H. (2010) Intermediate Microeconomics, 8° edition, W. W. Norton & Company.

Exam method

The final exam is a written. It is a unique exam for Economics of Business. There will be a pre-exam at the end of the modules of Macroeconomics and Microeconomics. 

Aggiornato A.A. 2014-2015

Microeconomics for business a.y. 2014-2015

The course provides a basic overview of fundamental microeconomic questions in the contemporary economic debate. It is divided in two parts: the first one proposes some basic game theoretical tools to analyze relevant firms’ decisions in production economies. The second part investigates how information influences economic decisions and outcomes, with particular attention to the financial aspects of firm’s activities. Topics include moral hazard and adverse selection in static frameworks. Each model’s result will be discussed in the light of relevant economic examples.

Course programme
Strategic decision: Game Theory (Gibbons)

• Normal form games: Nash equilibrium
• Application 1: Cournot Oligopoly
• Application 2: Bertrand duopoly with imperfect substitutes
• Application 3: Bertrand duopoly with a homogeneous good
• Mixed strategy equilibria.
• Extensive form games: Subgame Perfect Nash Equilibrium
• Application1: Stackelberg oligopoly
• Application 2: Rubinstein bargaining model with finite rounds
• Application 3: Diamond-Dybvig economy
• Application 4: Entry games
• Subgame Perfect Nash Equilibrium in mixed strategies
• Games with incomplete information: Cournot competition under asymmetric information

Monopoly pricing (Tirole)

• Monopoly with a linear tariff: positive and normative analysis
• Alternative pricing rules for firms with market power: linear, two-part and non-linear tariffs. 
• Price discrimination by a monopolist: the case of homogeneous consumers and symmetric information
• Price discrimination by a monopolist: the case of heterogenoues consumers and symmetric information
• Price discrimination by a monopolist: the case of asymmetric information
• Introduction to Principal-Agent models

References
Gibbons R., (1992)  “A primer in Game Theory”, Harvester Wheatsheaf.
Tirole, J. (1997) "The Theory of Industrial Organization", MIT Press.

Supplementary readings

Salaniè B., (2005) "The Economics of Contratcs. A primer", MIT Press.
Preston McAfee (2006), Lectures on pricing, California Institute of Technology, freely downloadable.

Dixit A. and Nalebuff B., (1991) Thinking Strategically: The Competitive Edge in Business, Politics and Everyday Life, Norton.

Van Zandt T. (2012), Firms Prices and Markets, freely downloadable online.

Additional supplementary readings will be indicated as the course goes on. The course instructor will provide indications to download articles, and pdf of the article whenever possible.
As a general reference for any prerequisite in microeconomics: Varian H. (2010) Intermediate Microeconomics, 8° edition, W. W. Norton & Company.

Exam method

The final exam for Microeconomics is a written exam (100% of the final grade), which will last about 1h30min.
The final grade for Economics for Business will be given by the average of the grades obtained in Microeconomics and in Macroeconomics.

All 1st year students of the MSc can take a pre-exam for Microeconomics scheduled on March 25th, 2015 in Buiding A. For 2nd year students, we require regular class attendance in 2015.  

The pre-exam for Microeconomics will have an identical structure with respect to the final exam and it will last about 1h30min.