1. Housekeeping & Introduction

2. Your teacher http://www.economia.uniroma2.it/iozzi/ (old)
(new)
Office: Dept. of Economics and Finance, Building B, 1st floor

3. Several types of students
Degree in Business and Economics (2nd and 3rd year students)
Part of the course INDUSTRIAL ORGANIZATION AND PUBLIC POLICY (12 cfu), composed of:
INDUSTRIAL ORGANIZATION (6 cfu): this course
PUBLIC ECONOMICS AND POLICY (6 cfu): by prof. G. De Fraja
Degree in Economia e Management, Curriculum in Business Administration (2nd and 3rd year students)
Part of the course INDUSTRIAL ECONOMICS (9 cfu), composed of:
Part of PUBLIC ECONOMICS AND POLICY (3 cfu): by prof. G. De Fraja

4. Timetable of lectures Lectures begin 18/9 Lectures end 28/10
Weekly lectures: MON – (3h) WED – (3h)
Tutorials FRI – (2h) – (2h) (depending on the group)

5. Tutorials
Three groups, each with a well qualified (PhD) teaching assistant, specialised in IO
Walter Ferrarese:
Valentino Moscariello:
Vesna Oshafi:
You may sit in the group you prefer, but your homework (see below) will be graded by YOUR teacher ONLY (homework may be slightly different across groups…)

6. Tutorial groups Group 1 Surnames from A to Franceschina
Tutorial in classroom T7, Friday h 14-16
Tutor: Walter Ferrarese,
Group 2
Surnames from Fratini to Orlando
Tutorial in classroom T4, Friday h 11-13
Tutor: Valentino Moscariello,
Group 3
Surnames from Orrù to Z
Tutorial in classroom T5, Friday h 11-13
Tutor: Vesna Oshafi,

7. Contacts and more Office hours:
with me
after the lecture
by appointment
TUE (teaching weeks only; please check by at least the day before)
with your TA
Check with him/her
Newsletter: Please enrol in the module newsletter!!!
Slides available on the module webpage after the lecture

8. Textbook and syllabus Textbook: Syllabus
Perloff, J. M. and J. A. Brander, 2014.,
Managerial economics and strategy (1st ed),
Pearson.
Syllabus
Chap. 1
Chap. 3 (Sect. 3.1 only)
Chaps. 4-12
Chap. 13 (excl. Sect. 13.6)
Chaps

9. Assessment
The exam is a single 3h (or 2h15m) unseen examination, together with the Public Policy part.
For the part relative to this course, the exam paper will be a mixture of
Essay-type question(s)
Exercise
Multiple choice questions
The overall mark will be the average of the mark in the two parts.
If the student fails, or chooses to reject the mark awarded, then he/she must resit the entire exam.
For all students, it is not possible to retake the exam in a different appello of the same sessione.

10. Bonus points
To stimulate participation in the lecture and tutorials, I (and your TA) will distribute bonus points
Bonus points may be to added to the final mark for this part of the course
Each student has a maximum of bonus points which will be disclosed at the end of the course
Bonus points are valid only until the next winter exam session
Bonus points may be earned in two ways
Classroom activity
Home assignments

11. Classroom bonus points
Bonus points are assigned to a student for a valuable comment or answer during a lecture:
In case of a good comment/answer, I will inform the student about the bonus point
Not all comments or answers are good enough to earn a bonus point !!

12. Home assignments
Home assignments will be distributed by the end of each Wednesday lecture and to be handed in before the start of the tutorial in the same week
Students can work out these assignements, alone or in pairs (maximum).
A randomly selected fraction (not known in advance) of completed assignment will be graded by your tutor, with a grade between 0 and the maximum grade available for that week’s homework
If two completed assignments are judged to be too similar, the students involved will get MALUS points (discretionary, from 0 to -)
Grades are your bonus points

13. Home assignments Assignments can be submitted to YOUR tutor ONLY:
By , addressed to your tutor’s address (he/she will tell you what it is)
In his/her mailbox (he/she will tell you where it is)
Rules for all submissions
EACH PAGE of the file must INCLUDE:
the name of your tutor
the name(s) of the student(s) who completed the assignment
Rule for submissions:
ONE SINGLE file, standard format (.jpg, .pdf, .doc etc.)
file must be ATTACHED to the
message must have “INDUSTRIAL ORGANISATION #” (where # indicates the teaching week, from 1 to 6; all capital) as SUBJECT LINE
All files submitted not in accordance to the above rules will be ignored
All files submitted after the deadline will be ignored

14. Introduction
Industrial organization uses the tools of economic analysis to the study the functioning of markets
Business strategy is the activity of formulating, implementing and evaluating that enables an organization to achieve its long-term objectives
Instead …
Managerial Economics application of economic analysis to managerial decision-making and strategy formulation
Two course at the price of one !!

15. Introduction Managers Trade-Offs
Make economic decisions by allocating the scarce resources at their disposal
To make good decisions, managers must understand and take into account the behavior of consumers, workers, other managers, and governments
Trade-Offs
In an environment of scarcity, managers must focus on the trade-offs that directly or indirectly affect profits.
Evaluating trade-offs often involves marginal reasoning: considering the effect of a small change.

16. Managerial Decision Making
How to Produce?
To produce a given level of output, a firm must use more of one input if it uses less of another input.
Example: Metal and plastic substitute each other in the production of cars. Small increments and reductions of them affect the car’s weight, safety, and cost.
What Prices to Charge?
Consumers buy fewer units of a product when its price rises given their limited budgets.
Example: When a manager can set the price of a product, the manager must consider whether raising the price offsets the loss from selling fewer units
What actions to take?
Investment, ad campaign, merge, labour contract …
Example: When advertising a new product, the manager has to weight the increase in sales to the ad campaing with the cost of the campaing itself

17. Managerial Decision Making
Other Decision Makers
Consumers purchase products subject to their limited budgets
Workers decide on which jobs to take and how much to work given their scarce time and limits on their abilities.
Rivals may introduce new, superior products or cut the prices of existing products.
Governments around the world may tax, subsidize, or regulate products.
Rational Maximizers and Behavioral Economics
To understand how others make economic decisions, most economic analysis assumes those ‘others’ are maximizers: they do the best they can with their limited resources.
However, in some contexts, behavioral economics explains those ‘others’ cannot successfully maximize for a variety of psychological reasons.

18. Managerial Decision Making
Markets
A market is an exchange mechanism that allows buyers to trade with sellers.
Most interaction and economic decisions are done in markets.
Firms, Consumers, and Government Policies
The primary participants in a market are firms who supply the product and consumers who buy it. But government policies such as taxes also play an important role in the operation of markets.

19. Managerial Decision Making
Strategy
A strategy is a battle plan that specifies the actions or moves that the manager will make to maximize the firm’s profit when interacting with a small number of rival firms.
Game Theory
One tool that is helpful in understanding and developing such strategies is game theory, which we use in several chapters.

20. Economic Models Models in Different Sciences
A model is a description of the relationship between two or more variables.
Meteorologists use models to predict weather conditions.
Medical researchers use models to describe and predict the effect of medications on diseases.
Astronomers use models to describe and predict the movement of comets and meteors.
Economists use economic models to explain how managers and other decision-makers make decisions and to explain the resulting market outcomes.

21. Economic Models Models, Economists and Managers
Managers use models to consider hypothetical situations—to use a what-if analysis —such as “What would happen if we raised our prices by 10%?” or “Would profit rise if we phased out one of our product lines?”
Models help managers predict answers to what-if questions and to use those answers to make good decisions.
Simplifying Assumptions
The real economic world is too complex to analyze fully. To understand it and be able to make valid predictions, economic models include only the essential issues, leaving aside complications that might disguise those essential elements.
Economic models can be presented in words, using graphs or mathematics. Regardless of how the model is described, an economic model is a simplification of reality that contains only its most important features.