Description

This course introduces students to the latest developments in the economic analysis of the inside workings of firms. The course is centered on the concept of organizational structure, which is made up of three variables: allocation of decision rights, performance evaluation and performance incentives. The course tries to explain the diversity of economic organizations, and more generally, why economic activity is sometimes carried out through firms and sometimes through markets. (Offered through Distance Education only.)

Objectives

The purpose of this course is to introduce you to the economic analysis of firms as it applies to the organization and governance. Economists have recently been trying to understand what goes on inside firms and to explain the diversity of economic organizations that people encounter in the real world. We will explore how economic activity is organized and why sometimes, economic activity is carried out through markets and through firms. We will study the links between decision-making authority, the measurement of performance and incentive compensation, and we will show how the proper balance between these three variables is crucial in the creation of value for the firm’s shareholders.

Grading Scheme

There is no Final Exam for this course.

Specific due dates will be posted to the course website.

Course Topics

• Unit 01: Introduction
   
• Unit 02: The Organization of the Economic Activity
   
• Unit 03: Coordination of Economic Activity Through Markets and the Price System
   
• Unit 04: Coordination of Economic Activity Through Hierarchies
   
• Unit 05: Organizational Architecture: How Best to Coordinate Plans and Actions
   
• Unit 06: Decision Rights
   
• Unit 07: Motivation and Incentives: Contracts, Private Information, Moral Hazard and Risk Sharing
   
• Unit 08: Individual and Corporate Performance Evaluations
   
• Unit 09: Corporate Governance
   

Course Prerequisites

ECON*2310 Students must have completed a minimum of 12 credits.