MGRECON 788 - Competitive Analysis

Course Description and Objectives

This course develops game theoretic techniques and applies those techniques in order to study strategic interactions in imperfectly competitive markets. The course provides students with analytical tools that are essential in order to quantitatively answer the following questions:

1. how industry structure determines the profit potential of each firm;
2. how strategic decisions of an individual firm shape the structure of its industry, and therefore,
3. how individual firms can strategically shape their industry in order to earn and sustain the highest potential economic profits.

Two central themes of the course are: (1) dynamic (inter-temporal) trade-offs and the credibility of strategic commitments, and (2) interaction in environments of uncertainty and asymmetric information. Specific insights that are developed by the use of game theoretic tools include: strategic timing of actions, strategic choice of product portfolio, strategic determinants of the boundaries of a firm, devices for strategic coordination, optimal trading mechanisms, pricing of privately-held information, incentive contracts etc.

The course uses a mixture of lectures, analytical problem solving, class exercises and case discussions. Grades are determined by performance in homework and case write-up assignments, case presentations, class exercises and contribution to class discussions. Working knowledge of microeconomic principles (at the level of MGRECON 780) is important; prior knowledge of game-theory is not required.

Course Web Page

Course Textbook

Recommended: Thinking Strategically: The Competitive Edge in Business Politics and Everyday Life, Avinash Dixit & B. Nalebuff.