This course has two main elements. In the first, neoclassical price theory is examined in order to gain a deeper understanding of price as a mechanism for coordination and resource allocation. This allows you to investigate whether direct control by a central authority is preferable to decentralised allocation through a pricing system. The second element of the course examines the determinants behind ownership and control, as well as the relationship between finance, ownership and control. This highlights classic problems such as the conflict between managers and owners, agent costs, contracts based on incentives in relation to control of managers, and company acquisition as a mechanism for discipline. You will learn theories that explain the horizontal and vertical borders of firms and why separation between ownership and control in limited liability firms has arisen and what its consequences are. The course looks at how shareholders can exercise control over the management of the company, and the advantages and disadvantages of various forms of incentive systems for employees. You will examine the reasons for concentrated ownership and the potential advantages and disadvantages of high ownership concentration, as well as the role of banks in the financing of corporations and as a substitute monitor for corporate management. This will teach you how to explain the relationship between the concentration of ownership, market and bank based financial systems, and economic growth.

Course design

The course is taught through lectures, although some individual work or group work may also be required. It is assessed through written examination.