Economics of Management Strategy

Module description


This module will focus on the central concepts of theory of firm and industrial organization. The first part of the module focuses on theory of firm and design of organization within the firm, while the second part focuses on competition between firms and market outcomes.

Additional Information:


Due to the nature of the topics included in this module you will have the opportunity to examine both domestic and international cases. Fundamentally, this module provides an application of economics methods to issues of management strategy and is, therefore, relevant in many countries.


Further, the understanding of management and the organisation of firms which you will acquire in this module is directly transferable to employment. This module will also equip you with skills in written communication, problem-solving, and group- working.


All of the resources for this module are available on the ELE (Exeter Learning Environment).

Full module specification

Module title:Economics of Management Strategy
Module code:BEE3027
Module level:3
Academic year:2017/8
Module lecturers:
  • Professor Todd Kaplan - Lecturer
  • Dr Luke Lindsay - Lecturer
  • Dr Surajeet Chakravarty - Lecturer
Module credit:30
ECTS value:



BEE2024 or BEE2025

This module cannot be taken by BSc/BA Economics students.



Duration of module: Duration (weeks) - term 1:


Duration (weeks) - term 2:


Module aims

The module is compulsory for the final year of SH Business Economics and an option for other final years undergraduates. Fundamentally, it provides an application of economics methods to issues of management strategy. This module will focus on the central concepts of strategic interaction. The first part of the module focuses on theory of firm and design of organization within the firm, while the second part focuses on completion between firms and market outcomes. 

ILO: Module-specific skills

  • 1. explain and discuss asymmetry of information in interaction between agents and discuss implication for organization design.
  • 2. undertand how and why signalling may occur.
  • 3. explain and discuss transaction costs and it can lead to different kind of contracts.
  • 4. explain and understand rent-seeking contests
  • 5. describe the different forms of contract design;
  • 6. understand the hold up problem and why it exists when contracts are incomplete
  • 7. understand delegation of authority
  • 8. understand when there should be a vertical design versus horizontal design of organisations
  • 9. Explain and analyse double marginalisation in vertical markets
  • 10. understand the role of credibility in strategic situations; analyse market structures
  • 11. analysze and understand firms competing with each other by choosing quantity or prices;
  • 12. analyse pricing strategies;
  • 13. analyse capacity plans;
  • 14. analyse a research and development plan;
  • 15. assess the potential profitability of an innovation strategy
  • 16. evaluate methods of deterring entry;

ILO: Discipline-specific skills

  • 17. apply strategic reasoning to recommend courses of action in simple situations;
  • 18. apply information economics to understand theory of firm.

ILO: Personal and key skills

  • 19. demonstrate written communication skills;
  • 20. demonstrate problem solving skills;
  • 21. demonstrate group working skills.

Learning activities and teaching methods (given in hours of study time)

Scheduled Learning and Teaching ActivitiesGuided independent studyPlacement / study abroad

Details of learning activities and teaching methods

CategoryHours of study timeDescription
Contact hours70Lectures
Contact hours20Group Work hours

Formative assessment

Form of assessmentSize of the assessment (eg length / duration)ILOs assessedFeedback method
Feedback during revision sessions60 minutes1-21Oral/online

Summative assessment (% of credit)

CourseworkWritten examsPractical exams

Details of summative assessment

Form of assessment% of creditSize of the assessment (eg length / duration)ILOs assessedFeedback method
Final Exam703 hours1-20Written Feedback
Assignment 1151 essay/ 2 numerical 1- 6, 16-18Answers posted online
Online Tests15online tests with numerical problems. The tests will be every two weeks in term 2.7-18Scores and solutions will be posted online.

Details of re-assessment (where required by referral or deferral)

Original form of assessmentForm of re-assessmentILOs re-assessedTimescale for re-assessment
Assignments 1 & online testsAssignment (30%)1-21August Examination Period
Final ExamFinal Exam 3 hours (70%)1-20August Examination Period

Syllabus plan

1)  Adverse selection and asymmetry of information.
2)  Risk and incentive.
3)  Moral hazard.
4)  Incomplete contracts and hold-up.
5)  Authority and delegation.
6)  Multi-tasking.
7)  Team production.
8)  Market structures.
9)  Quantity and price competition.
10)  Entry Deterrence.
11)  Investment and innovation.
12)  R and D races.
13)  Pricing strategies.

Indicative learning resources - Basic reading

Besanko D. et al., (2013) Economics of Strategy Wiley. 6th Edition

Carlton, D. W. and Perloff, J. M. (2015) Modern Industrial Organization (4th Global Edition), Pearson

Other references to books and articles will be given from time to time.

Module has an active ELE page?


Origin date


Last revision date