Organisational Economics - ECON5112

The course draws upon the influential transaction cost literature to examine the existence and boundaries of firms. Representing a firm as the focal point of a set of contracts, the fundamental conflicts that arise within firms are discussed and a coherent economic framework is introduced to analyse the design of organisational architecture. The effect of strategy and business environment on choice of organisational design is explored. Utilizing the recent advances in game theory and information economics, the course provides a toolkit for managers to analyse the key features of organisational architecture - decision-making authority, the reward system, and the performance evaluation system.