1. Welcome to EC 209: Managerial Economics- Group A By: Dr
Welcome to EC 209: Managerial Economics- Group A By: Dr. Jacqueline Khorassani
Study Guide
Week Eight
(Note: You must go over these slides and complete every
task outlined here before Thursday, October 25)

2. Don’t forget that Aplia Assignment Is due on Tuesday before 5 PM.
Don’t miss it.

3. This week: You will need to study
Papers by Jensen (required) and Gibbons (optional)
Available on Blackboard;
Chapters 6 (including the appendix) & 7 of Baye

4. What are the implications of specialized investments?
How do specialized investments relate to contract length?
What is Williamson’s Analysis?

5. What is the Principal-Agent Problem?
Solutions
Internal/external incentives
What is the indifference curve approach to managerial incentives? (appendix of Chapter 6)
What are the profit sharing schemes and how do they work?
How can the problem between managers and workers be solved?
What are the managerial incentive schemes? (Jensen’s paper)

6. Chapter 7 of Baye What is market structure?
What are the major structure variables?
What is the Four-Firm Concentration Ratio?
What is the Herfindahl-Hirschman Index (HHI)?
What are the limitations of concentration measures?
What is the Rothschild Index?
What is the Lerner Index?
What are the barriers to entry?
What is the markup factor?
What is the Dansby-Willig Performance Index

7. Integration and Merger Activity
What is Vertical Integration?
What is Horizontal Integration?
What is Conglomerate Mergers?