Master 2020/2021

Managerial Economics

Type: Bridging course (Arts and Culture Management)

Area of studies: Management

Delivered by: Department of Management

Where: St.Petersburg School of Economics and Management

When: 1 year, 1 module

Mode of studies: offline

Instructors: Maxim Storchevoy, Dmitrii Trubnikov

Master’s programme: Art and Culture Management

Language: English

ECTS credits: 3

Contact hours: 24

Course Syllabus

Abstract

The purpose of the course is to teach the students how to apply the principles and models of economic theory for making managerial decisions: 1) estimating and analysing demand, 2) cost analysis, 3) smart pricing (price discrimination, tying, bundling, non-linear pricing), 3) competing in various market structures, 4) making decisions about product quality and differentiation.

Learning Objectives

• Learn the economic way of thinking (rational choice, optimal allocation of resources, models, etc.)
• Learn various market structures (competition, monopoly, oligopoly): how the firms may compete and what is potential equilibriums. Implications fo strategic management.
• Learn various strategies of pricing for better profit (price discrimination, bundling, tying, etc.)
• Learn main types of costs and cost functions, and their application for decision making.
• Learn various strategies of getting competitive advantage through quality differentiation, R&D and advertising.

Expected Learning Outcomes

• Upon the course completion, the student is expected know how to find optimal distribution of resources, optimal prices and quantities
• Upon the course completion, the student is expected know how to estimate demand on the basis of available data
• Upon the course completion, the student is expected know how to invest in R&D to maximize profit and create competitive advantage
• Upon the course completion, the student is expected know how to make decisions about of price and quantity competition in various market structures
• Upon the course completion, the student is expected know how to make decisions about product quality and degree of differentiation
• Upon the course completion, the student is expected know how to make production and pricing decisions for various cost structures
• Upon the course completion, the student is expected know how to use advertising expenses to maximize profit
• Upon the course completion, the student is expected know how to use marginal analysis in managerial decisions
• Upon the course completion, the student is expected know how to use various techniques of smart pricing (price discrimination, tying, bundling, etc.)

Course Contents

• Demand and Supply
  The basic model of economic theory is the market equilibrium model. In this topic we learn what is demand function and supply function, how they both determine the equilibrium price and quantity. Then we learn how we can use this model to analyse changes in the market (shifts of equilibrium). Finally we talk about governmental regulation of the market.
• Market Power and Profit Maximization
  Market power vs. monopoly. Marginal revenue and its application for profit maximization. Geometrical and algebraic solutions. Marginal revenue curve and its shapes.
• Demand Estimation
  Main methods of estimating demand function in the real business: 1) survey, 2) experiment, 3) historical data, 4) regression analysis. Advantages and disadvantages of every method. Practical exercises of using these methods.
• Price Discrimination
  Perfect Price Discrimination, Group Price Discrimination by Observation, Group Price Discrimination by Versioning
• Oligopoly
  Imperfect competition and oligopoly. Strategic interaction and game theory. Quantity competition. Price competition: homogeneous and heterogeneous. Collusion. Competition through R&D and advertising.
• Perfect Competition
  Perfect Competition as concept. Profit Maximization and Loss Minimization by one firm. Market equilibrium in short run an long run.
• Costs
  Costs types and cost curves (FC, VC, MC, TC, AC, AVC, AFC). Short run and long run.
• Smart Pricing
  Bundling, Non-Linear Pricing, Tying

Assessment Elements

• Test 1 - Demand and Supply. Profit Maximization
• Test 2 - Smart Pricing
  Price Discrimination Perfect Price Discrimination Group Price Discrimination: Observation Group Price Discrimination: Versioning Bundling Non-Linear Pricing Tying
• Test 3 - Costs and Competition
  Costs, Perfect Competition in Short and Long Run, Oligopoly, Collusion

Interim Assessment

• Interim assessment (1 module)
  0.400 Exam 0.600 Tests (1-3)

Bibliography

Recommended Core Bibliography

• Dawsey, A. E. (2014). ECNS 301.01: Intermediate Microeconomics with Calculus.

Recommended Additional Bibliography

• O. M. Makoviei. (2018). Organization of Business Games as an Interactive Method of Teaching Foreign Languages to Students of Hei Aquiring Specialties Connected with the Transport Industry. https://doi.org/10.30977/АТ.2219-8342.2018.43.0.118