Managerial Economics

Dr. Luke M. Froeb received his undergraduate degree from Stanford University and Ph.D. from the University of Wisconsin. When the antitrust agencies began using his models to predict the competitive effects of mergers, his academic research passed what he calls "a market test." This resulted in his 2003 appointment as chief economist of the Federal Trade Commission, where he enforced the antitrust and consumer protection laws of the United States (U.S.). He also managed 75 economists who tore down barriers to competition (often erected by well-meaning bureaucrats). In July 2005, Dr. Froeb returned to Vanderbilt University where today he holds the William Oehmig Chair of Entrepreneurship and Free Enterprise. He used to win Vanderbilt's "Most Outstanding Teacher" award, but not since he recruited Dr. Brian McCann. This text, MANAGERIAL ECONOMICS: A PROBLEM-SOLVING APPROACH, shows students how to use economics to solve business problems. It contains real-world problems (and solutions) drawn directly from Dr. Froeb's executive students. Dr. Froeb has taught at Tulane University and served as chief economist at both U.S. Competition Agencies: The Federal Trade Commission and the U.S. Department of Justice. Dr. Brian T. McCann has taught courses in managerial economics, strategic management, decision making and entrepreneurship at the undergraduate, M.B.A. and executive education levels. He holds an M.B.A. from Vanderbilt University, where he earned the Founder's Medal as the top graduate of his class, and he received his doctoral training in strategic management at Purdue University's Krannert School of Management. He currently serves as the David K. Wilson Professor of Strategic Management at Vanderbilt’s Owen Graduate School of Management. His more than 10 years of industry experience include operating a residential land development company, serving as the CFO for an Internet start-up and implementing new strategic initiatives for a non-profit economic development group. In addition to co-authoring this M.B.A.-level textbook in managerial economics, Dr. McCann's work has appeared in journals such as Strategic Management Journal, Academy of Management Journal, Organization Science and Strategic Entrepreneurship Journal. His current research interests span strategic management and entrepreneurship. Dr. Michael R. Ward teaches courses in managerial economics, economics of strategy, causal inference and digital business transformation. He has spent more than two decades in academia, holding positions at the University of Illinois and the University of Texas at Arlington (UTA). He is currently a professor of economics in the Business School at UTA and a research associate in digital economy at Zentrum für Europäische Wirtschaftsforschung (ZEW) in Mannheim, Germany. Prior to returning to academia, Dr. Ward served as an economist at the Federal Trade Commission. Dr. Ward's research focuses on the economics of information technology, especially competition and innovation in video games. He earned his undergraduate degree in mathematics and economics from UCLA and his Ph.D. in economics from the University of Chicago. His research has appeared in Review of Economics and Statistics, Journal of Law and Economics, Research Policy, Technological Forecasting and Social Change as well as New Media and Society. Dr. Mike Shor is a professor of economics at the University of Connecticut, where he conducts research in behavioral economics and game theory. Dr. Shor has taught courses in managerial economics, game theory, industrial organization and pricing strategies at the undergraduate, M.B.A., and Ph.D. levels. He received his B.A. in economics and foreign affairs from the University of Virginia and his Ph.D. in economics from Rutgers University. He also consults on antitrust issues, patents and pricing. Dr. Shor’s interdisciplinary research has appeared in journals such as Review of Economics and Statistics, Decision Analysis, MIS Quarterly, Marketing Science and Contemporary Accounting Research.

• Part I: PROBLEM SOLVING AND DECISION MAKING.1. Introduction: Incentive Alignment.2. The One Lesson of Business.3. Benefits, Costs, and Decisions.4. Extent (How Much) Decisions.5. Investment Decisions: Look Ahead and Reason Back.Part II: PRICING, COST, AND PROFITS.6. Simple Pricing.7. Economies of Scale and Scope.8. Understanding Markets and Industry Changes.9. Market Structure and Long-Run Equilibrium.10. Strategy: The Quest to Keep Profit from Eroding.11. Foreign Exchange, Trade, and Bubbles.Part III: PRICING FOR GREATER PROFIT.12. More Realistic and Complex Pricing.13. Direct Price Discrimination.14. Indirect Price Discrimination.Part IV: STRATEGIC DECISION MAKING.15. Strategic Games.16. Bargaining.Part V: UNCERTAINTY.17. Making Decisions with Uncertainty.18. Auctions.19. The Problem of Adverse Selection.20. The Problem of Moral Hazard.Part VI: ORGANIZATIONAL DESIGN.21. Getting Employees to Work in the Firm's Best Interest.22. Getting Divisions to Work in the Firm's Best Interest.23. Managing Vertical Relationships.Part VII: WRAPPING UP.24. You Be the Consultant.