APPLIED ECONOMICS IN INTERNATIONAL BUSINESS

An Elective Graduate Course – MBT Tamir Agmon

School of Business, Economics and Law, Goteborg University

September 2015

THE PURPOSE OF THE COURSE

The course has three main purposes:1. To gain better understanding of the main issues in

International Business in order to become better managers in the field.

2. To be able to use concepts, analytic tool and information from economics in the analysis and management of firms and organizations in international business.

3. To be able to read economics academic papers in a useful managerial way.

METHODOLOGY

Each class is divided into four parts:1. Presenting an issue in International Business2. Using a model or concept in economics to discuss

the issue.3. Using a specific academic paper in economics to

discuss a model or an approach relevant to our discussion.(In each class we discuss one paper out of the readings. The papers are listed below).

4. Using an example applying the economic model to the issue at hand.

ACADEMIC PAPERS DISCUSSED IN THE CLASS - 1

Class # 1: Agmon (2003) – Application of Game Theory to negotiations between MNEs and governments.Class # 2: Helpman et al (2004) – Application of neo-classical trade model and economies for scale.Class # 3: Baldwin (2006) – The firm as a nexus of explicit and implicit contracts.Class # 4: Baker, Gibbons and Murphy (2002) – Application of IO and Game Theory to contracting between two firms.Class # 5: Findlay (1970) – Monetary and fiscal policies as instruments for government policy in international business.

ACADEMIC PAPERS DISCUSSED IN THE CLASS - 2

Class # 6: Blomstrom and Kokko (1994) – Industrial policy and comparative advantage.Class # 7: Clougherty (2004) – Application of Cournot and integrating IO and IB.Class # 8: Modigliani and Miller (1958) – Application of the MM cost of capital and capital structure model.Class # 9: Eisenmann et al (2010) – Price discrimination and economy of scale over time.Class # 10: Agmon (2015) – Transactions costs and the development of the MNE.

A BIRD’S EYE VIEW OF THE COURSE

The following is a list of the ten three hours sessions that comprised the course. Each session focuses on one or two main points that together provides a comprehensive view of the main aspects of International Business as a field of applied economics.

Session One:• The main actors in International Business and the

interaction among them.• The nature of the market for International Business.• A macroeconomic approach to International Business.

Session Two:• Is FDI substitute for trade?• Economies of scale, tangible and intangible costs of trade.Session Three:• The political economy of International Business.• The spatial and political organization of global production.Session Four:• Outsourcing, vertical integration and the dynamics of

global income distribution.• Contracting, re-contracting and bargaining.

Session Five:• Government fiscal and monetary policy as instruments to

change comparative advantage.• Development economics and International Business.Session Six:• Industrial policy and the source of competitive advantage of

Swedish multinational enterprises.• The dynamics of International Business in Sweden.Session Seven:• Monopolistic competition in the International Business market• Regulation and MNEs.

Session Eight:• Do MNEs affect the risk level in the world?• A portfolio approach to liabilities issued by MNEsSession Nine:• Open platforms, two-sided markets and a new form

of MNEs.• Globalization and digital technology.Session Ten:• A comprehensive view of MNEs and the International

Business Market.