A83220 Doing Business Around the World

Scuola di Economia e Management
Academic Year 2019/20 Second Semester

Docente TitolareAnna Paola Della Valle
Office"Torre" (main tower), 7th floor

Learning Objectives

At the end of the course the student will be able to:

  • Identify and analyze firm-specific objectives and organizational, pricing and marketing strategies tailored to business success or other firm objectives under specific market structures and conditions.
  • Address the extent to which different forms of government intervention may affect the specific structure of the market and firm strategy including: regulation, subsidies, tariffs, quotas, antitrust laws, patents and copyrights

Course Prerequisite (no exceptions): The course is meant for graduate students in economics who have a solid foundation in microeconomic theory and industrial organization.  Undergraduate students are generally not admitted in this course.  However, undergaduates who are in their final year of coursework can occasionally be admitted to the course but only upon permission of the instructor. 

Learning targets

This course requires students to apply and analyze what they learn in the course though in-class discussions, a written paper and group presentations.   As such, it gives students immediate feed back and practical tools that require them to put into practice what they are learning.  This includes: developing anlaytical and creative thinking as well as research, writing and presentation skills -- all of which will prove useful for future academic courses and practical work experiences.        

Course Content

This course reviews the main models of market structure as a basis for analyzing and discussing real world decision-making by market participants, including firms, consumers and government regulators.  The aim of the course is to give students a strategic understanding of the behavior of firms and other market participants in economies across the world.  It does so by focusing on ways in which firm-specific strategies influence market structure, as well as ways in which firms choose strategies in response to the structure of the markets in which they operate.  Within this context, the government can play an important role in influencing firm behavior, market structure and market outcome.    

The lectures will make extensive use of real-world examplescase studies and in-class experiments to illustrate and analyze these relationships and interactions, including:

  • Hollywood strategy: what movies to release and when
  • Zegna, Ferrero, Armani, Illy: privately held and proud of it
  • Bayer, Coca-Cola, Gucci: the power of brand name
  • Tech sector: waiting longer before going public
  • The Italian highway system: a public/private partnership
  • Collusion pays off (even if you’re caught): vitamins, flat screens, beer, banking
  • Cooperative in-class experiment: why cartel members cheat
  • Monopolization antitrust suits: Microsoft and Intel
  • Do Facebook and Google have too much market power?
  • Government regulation in the market for cigarettes
  • Cheap Chinese imports: rationales for and against trade restrictions

The course may feature guest speakers who are experts in their respective fields.  Past guest speakers included:

  1. Luxury goods: Anna Zegna, Image Director Zegna Group, President Zegna Foundation
  2. Banking: Dr. Eugenio Namor, Professor LIUC, President Anthilia Capital Partners
  3. Equity Research: Fabrizio Malavolti, Hammer Partners
  4. Lobbying in ETFs and taxation: Dr. Federico Sidoti, consultant Ecomunicare

Workshop in Firm Organizational Features: The course includes a separate mandatory workshop of 20 hours taught by Prof. Filippo Pavesi.  The workshop offers students an in–depth analysis of the determinants of firm size, corporate hierachies and organizational incentives making use of case studies and in-class simulations. Specific topics that will be analyzed are:

  • Vertical boundaries of the firm (make or buy decisions)
  • Integration and its alternatives
  • Understanding organizational incentives: the principal agent framework
  • Corporate Hierarchies: do they still matter? 

Workshop Text Book: Dranove, Besanko, Shanley, Schaefer, “Economics of Strategy”, Wiley, 7th Edition (Chapters 3 and 4); Ricketts M., “The Economics of Business Enterprise. An Introduction to Economic Organization and the Theory of the Firm”, Edward Elgar, 3rd Edition (Chapters 5 and 6).  Additional references and readings will be provided during the course.



Course Delivery

The course will run under a lecture format requiring active students’ involvement. Students are responsible for LEARNING the assigned lecture material and for PROVIDING a meaningful contribution to the discussion led by the instructor. Enrollment in this class involves a commitment from students to dedicate the time and energy required to be prepared and active class participants.  

Lecture materials (slides, notes, articles and video links) as well as course informational updates are posted on the E-Course Moodle platform.

Textbook (optional): Martin Ricketts,The Economics of Business Enterprise - An Introduction to Economic Organization and the Theory of the Firm, Edward Elgar Publcihsing, 2019.    

Course Evaluation

The total course grade is out of 30 points of which 70% (21/30 points) from Prof. Della Valle's portion of the course and 30% (9 points) from the Workshop in Firm Organizational Features taught by Prof. Pavesi. 

The grade for Prof. Della Valle's portion of the course will be as follows:  class attendance and participation 25% (5 pts.), group project 50% (10 pts.), topic-specific paper: 25% (6 pts.).

The grade for Prof. Pavesi's portion of the course will be as follows: class attendance and participation 35% (3 pts), in-class group presentation 65% (6 pts). 

Focusing students' grades on analytical, research and writing skills (rather than strictly answering exam questions) shifts the focus of learning from didactic feedback to more active creative thinking and analysis.   The intention is to give the students skills that will prove helpful in better assimilating the material learned in the course as well as applying it in real-world contexts.  

Attending students: Attending students are required to complete all of the course requirements by the end of the course date.  No late submissions of group presentations or topic specific papers are permitted.  Students who have not completed the course requirements by the end of the course date will be considered to be non-attending and required to abide by the corresponding grading guidelines for non-attending students (see below).    

Non attending students (please read these instructions carefully): Due to the nature and structure of this course, students are strongly discouraged from following this course if they cannot attend classes.  However, those students for whom this class is a degree requirement and who cannot attend class for acceptable reasons, can fulfill the course requirements by completing the following:

1. A three-hour written non-attending student exam based on comprehensive knowledge of all of the material (lecture slides, notes and readings) posted on the E- course Moodle platform as well as the contents of chapters 2-4, 8, 13-15 from the textbook Martin Ricketts, The Economics of Business Enterprise – An Introduction to Economic Organisation and the Theory of the Firm, Edward Elgar Publishing, 2019. The exam for non-attending students will also include questions aimed at assessing the student’s knowledge of applied microeconomics and industrial organization.

For materials relating to the Workshop in Firm Organizational Features non-attending student should contact Prof. Pavesi directly.

2. Two individual research papers: the first on a topic relating to Prof. Della Valle’s portion of the course and the second relating to Prof. Pavesi’s workshop. Non-attending students should contact Profs. Della Valle (a.dellavalle@liuc.it) and Pavesi (fpavesi@liuc.it) regarding the nature, scope and choice of the paper topics. 

Grading for non-attending students will be determined as follows: 50% final exam (15 points) and 50% papers (15 points of which 9 for Prof. Della Valle’s paper and 6 for Prof. Pavesi’s paper).

Note: Students for whom the course is not a degree requirement will be permitted to take the course on a non-attending basis only upon permission of Prof. Della Valle who must be contacted before the course is accepted in their study plan


Session 1
Hours of lesson: 3
Instructor: A. Della Valle


  • Course introduction and organization; Relationship between market structure, firm behavior and role of government.


Session 2
Hours of lesson: 3
Instructor: A. Della Valle


  • Theory of the firm
    • Different types of firm structures: sole proprietorships, partnerships, corporations.
    • Who runs firms and with what objectives.
    • Problem of separation of ownership from control 


  • US: Perverse effect of stock options on managerial behavior in the 1990s.
  • Italy: Gucci’s decision to go public vs. Zegna’s decision to stay private.
  • Tech companies are waiting longer before going public
  • US/EU banking: do scale and scope economies justify high concentration?
Session 3
Hours of lesson: 3
Instructor: A. Della Valle


Market Model 1: Strategies in Extremely Competitive Markets

  • Closed economies
  • Open economies
  • International trade: rationales for restrictions on trade--tariffs, quotas, subsidies 


  • Commodities markets: grain, wheat, coffee, sugar, cotton, oil, the stock market 
  • Is there room for profit in extremely competitive markets?
  • EBay: how it transformed markets by reducing information asymmetry.
  • Google, Facebook, Amazon: is the internet driving competition or market monopolization?
  • Drastic price swings in world oil markets 
  • US restrictions on Chinese imports 
  • Is China’s RMB/US$/Euro exchange rate “fair” competition?
  • Poor countries’ walk out of World Trade Association (WTO) talks
  • WTO retaliatory tariffs: EU vs.US steel and bananas; US vs. Brazil cotton. 
  • The ongoing battle between Airbus and Boeing
Session 4
Hours of lesson: 3
Instructor: A. Della Valle


Market Model 2: Strategies in monopolistically competitive (niche) markets


  • Top 10 US advertisers: advertising budgets ranging from 10 to 30% of sales. 
  • Why do consumers pay large premiums for brand name products (even when they have identical ingredients?)
  • Strategy Italy: focus on quality and uniqueness
  • Strategy Germany: focus on technology and reputation
  • Strategy China: Geely Buys Volvo 
  • The Chinese threat: how can you turn your competitors into clients? 
Session 5
Hours of lesson: 3
Instructor: A. Della Valle


Market Model 3: Strategies in non cooperative oligopolies

  • Using game theory to model non cooperative behavior


  • Hollywood: what movies to release and when
  • Advertising: whether to adopt a high-level advertising budget
  • Boeing/Airbus: whether to develop new large-body aircraft
  • In class experiment: the number picking game


Session 6
Hours of lesson: 3
Instructor: A. Della Valle


Market Model 4: Strategies in cooperative oligopolies

  • Antitrust: price-fixing


  • OPEC oil cartel’s strategy: once successful now almost defunct
  • Cartel strategies among major producers of beer, flat screens, animal feed, switch gear, banking in the US, EU, China and Japan.
  • Price fixing in the market for vitamins: Roche/BASF/Takeda/Rhone Poulenc.
  • Top banks guilty of rigging the market for interest rate derivatives and foreign exchange transactions.
  • In class experiment: collaborate or cheat  
Session 7
Hours of lesson: 3
Instructor: A. Della Valle


Market Model 5: Strategies in monopoly markets

  • Government intervention into markets: antitrust


  • Entry-deterring strategies in airline, titanium oxide and breakfast cereal industries 
  • Do Google and Facebook have too much marlet power?
  • Hitting the R&D patent jackpot: Prozac and Viagra
  • The 15 biggest mergers of all time
  • Microsoft, Intel antitrust suits: illegal attempts to monopolize market for PC operating systems and microchip processors
  • EU allows TNT Fed Ex merger
  • EU denies then allows Olympic/Aegean merger
Session 8
Hours of lesson: 3
Instructor: A. Della Valle


Government intervention into markets: regulation


  • Back and forth on commercial banking regulation
  • Case study: Cigarette markets in Italy, France, Holland and Spain
  • Case study: Italian highways: private/public partnership
  • Case study: US Media concentration and cross ownership rules
  • Used car maket: Akerloff’s market for lemons
  • Italian highway system: a public/private partnership
  • Gasoline taxes vs. fuel mileage standards in the US, EU and China
  • CO2 emissions: Kyoto update--a world problem requires a world solution
Session 9
Hours of lesson: 3
Instructor: A. Della Valle


Government Intervention Into Markets: Liberalization, Deregulation, Privatization


  • UK: Deregulation of electricity generation
  • US: Deregulation of telecommunications, cable television and trucking
  • Italy: privatizations--from telecom to tomatoes
  • Eastern Europe: privatize, liberalize—too much too soon?
  • Mexico: how privatization of telecommunications and television led to the Sims and Azcarraga empires.
  • Are financial markets still too liberalized?


Session 10
Hours of lesson: 4
Instructor: A. Della Valle


Course overview.  Sample exam questions and answers 

Guest speakers.


Session 11
Hours of lesson: 4
Instructor: A. Della Valle


Student group presentations


Session 12
Hours of lesson: 4
Instructor: A. Della Valle


Student group presentations


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