Module Identifier EC31410  
Academic Year 2006/2007  
Co-ordinator Mr Dennis A Thomas  
Semester Semester 1  
Mutually Exclusive EC31920 (only available to N122 and N1* students)  
Course delivery Lecture   10 Hours  
  Seminars / Tutorials   5 Hours  
Assessment TypeAssessment Length/DetailsProportion
Semester Exam1.5 Hours  100%
Supplementary Exam1.5 Hours  100%

Learning outcomes

On successful completion of this module students should be able to:
- understand the role of markets and firms as alterntive coordinating mechanisms
- understand transaction cost economics
- understand the determination of firm boundaries with respect to diversified and vertically integrated activities
- understand internal organisational forms
- understand the implications of the separation of the ownership and management (control) functions
- understand principal-agent theory and incentive contracts


The module investigates economic explanations of the nature of firms, their organisational form and the scope of their activities. It employs transaction cost economizing to explain the circumstances in which the firm is superior to other forms of organisation, and extends the analysis to examine firm growth and development and the determination of firm boundaries. The module also examines the internal organisation of firms, with particular regard to decision-making and the control problems that may occur, together with the implications of the separation of ownership from managerial control.

Brief description

This third year module is available only to Business and Management students and is delivered by lecture and tutorial classes and assessed by final examination. It treats the question of economic coordination and the nature and scope of firms activities.


1. Economic Co-ordination: Firms, Markets and Organisations
2. Firm Boundaries: Vertical Integration
3. Firm Boundaries: Diversification
4. Internal Organisation
5. Ownership and Control

Transferable skills

Apart from attaining and improving subject specific skills the module enables students to develop and enhance a variety of transferable skills. Attendance at lectures requires students to listen and digest material and take structured notes. Participation in tutorials involves prior preparation together with communication and presentation during class. The study sheets assist students in organising their thoughts, reading and preparation of notes and self-test accumulated knowledge as they progress through the module. All aspects of the module necessarily involve time management skills.

The final examination requires rigorous preparation and assimulation of material prior to structured thought and essay writing within a fixed time period.

Reading Lists

** Recommended Text
Besanko, Dranove, D and Shanley, M (2000) Economics of Strategy 2nd edition (3rd edition 2005). Wiley
Lipczynski, J, Wilson, J and Goddard, J (2005) Industrial Organization: Competition, Strategy, Policy 2nd edition. Prentice Hall
** Supplementary Text
Clarke, R and McGuinness, T (eds) (1987) The Economics of the Firm, Blackwell
Douma, S and Schreuder, H (2002) Economic Approaches to Organizations 3rd edition. Financial Times Prentice Hall 0273651994
Milgrom, P and Roberts, J (1992) Economics, Organization and Management Prentice-Hall International
Rickard, S (2006) The Economics of Organizations and Strategy McGraw Hill


This module is at CQFW Level 6