Dr Jörn Rothe, MAR.6.13

This course is compulsory on the MSc in Management and Strategy. This course is not available as an outside option.

Students must have completed Behavioural Strategy (MG4A5).

The aim of this course is to build on and integrate industrial economics, game theory and management strategy to develop a framework for thinking about competition within markets and industries. Game theory provides the abstract theory of strategic interaction, and microeconomics (specifically industrial economics) provides the background on demand, production, and market structures. In this course we discuss the integration and application of these approaches in thinking about competitive strategy for firms in markets.

This course focuses on the strategic aspects of competing against other firms within the same industry

The course focuses on the strategic aspects of competing against other firms within the same industry. It starts with an introductory industry case study, and then investigates why a purely empirical approach to strategy cannot work. It then covers market definition, market structure, factors of production, and the estimation of cost and demand. It then analyses price competition in its relationship with market structure, first from a static perspective, which is then extended to a two-stage and then a fully dynamic perspective, which allows analysing collusion and price wars. The course then focuses on the strategic dimension of innovation and competition in R&D, discusses market entry and exit, and brings the topics together in an example of an intra-industry study of strategic competition. In this way the course provides a theoretical framework and relates theory to examples and case studies.

20 hours of lectures and 8 hours of seminars in the WT. 2 hours of lectures and 1 hour of seminars in the ST.

Students on this course will have a reading week in Week 6, in line with Departmental policy.

In its Ethics Code, LSE upholds a commitment to intellectual freedom. This means we will protect the freedom of expression of our students and staff and the right to engage in healthy debate in the classroom.

There is no fully adequate textbook for this course.

Indicative texts for background reading are David M. Kreps, Microeconomics for Managers, 2nd edition, Princeton University Press, 2019 (selected chapters) and D Besanko, D Dranove, M Shanley and S Schaefer, Economics of Strategy, 7th edition, Wiley, 2017.

A detailed reading list will be provided at the beginning of the course.

Exam (100%, duration: 2 hours) in the spring exam period.