Autumn

This module is concerned with the analysis of firm behaviour and in so doing aims to go beyond the black box concept of the production function. For example, it examines why firms exist and the vertical and their horizontal boundaries. In particular, the disadvantages associated with very large firms are discussed. The reasons why firms form alliances or choose to locate close to other similar enterprises are also explored. Raising finance is a very important issue for firms and the different ways in which firms can finance an investment will analysed, both for large and small firms, together with their associated problems

None

The objective of the Economics of the Firm is to provide an economic approach to an understanding of businesses and their principal elements. Companies are complex organisation, their managers constantly make decisions that affect the economic viability of the firms in which they operate. Why do some companies succeed and others fail, how can management reverse the fortunes of declining firms, what allows emerging companies to be successful in highly competitive industries? What elements of success identify successful entrepreneurial ideas.

On the completion of this module, students should be able to:-

• Recognise of the importance of economics when considering business issues
• Understand why firms and industrial clusters exist
• Recognise the constraints of firm size
• Appreciate the problems associated with firms’ attempts to raise finance
• Make policy recommendations to improve company performance

   

The following is an indication of the likely topics to be covered:-

• Standard production concepts – factor demands; returns to scale; reasons for internal economies of scale; productivity; efficiency
• The firm – types; theories; internal organisation; boundaries; horizontal and vertical integration
• Firm strategy – alliances; external economies of scale; causes of agglomeration; examples of industrial clusters; government policy towards clustering
• Small firms – entrepreneurship and self-employment; risk and return; liquidity constraints; empirical evidence; government policy towards small business

   

Lectures (20 hrs)

J. Kay, (1995), Foundations of Corporate Success, Oxford
D.Besanko, D.Dranove and M.Shanley, (2000), Economics of Strategy,  2^nd edition John Wiley & Sons Inc., New York
M. Moschandreas, (2000), Business Economics, 2^nd edition, Thomson Learning, London

10 March 2011