Chapter 1Supplementary ReadingsFor a general description of the scope of managerial economics and its relationship to other fields of study, see:Bazerman, M. Judgment in Managerial Decision Making. New York: Wiley, 1997, Chapters 1 and 9.A discussion of the theories of the firm is found in:Bolton, Patrick, and David F. Scharfstein. "Corporate Finance, the Theory of the Firm, and Organizations." Journal of Economic Perspectives, vol. 12 (Fall 1998), pp. 95-114.Holstrom, Bent, and John Roberts. "The Boundaries of the Firm Revisited." Journal of Economic Perspectives, vol. 12 (Fall 1998), pp. 73-94.Lamoreaux, Naomi R. "Partnerships, Corporations and the Theory of the Firm." American Economic Review, vol. 88 (May 1988), pp. 66-71.On the theories of profit, see:Solomon, David. "Economic and Accounting Concepts of Income." The Accounting Review, vol. 36 (July 1961).Wong, Robert E. "Profit Maximization and Alternative Theories: A Dynamic Reconciliation." American Economic Review, vol. 65 (September 1975).Business ethics is discussed in:Reich, Robert B. "The New Meaning of Corporate Responsibility." California Management Review, vol. 40 (June 1998), pp. 8-17.Shaw, W. Business Ethics. Belmont, Calif.: Wadsworth, 1991.For the globalization of managerial decision making and qualifications for the future business leader, see:Barlett, Christopher A., and Samantra Ghoshal. Managing across Borders. Boston: Harvard Business School Press, 1998.Griffin, Ricky W., and Michael W. Pustay. International Business: An International Perspective. Boston: Addison-Wesley, 1999.Salvatore, Dominick. International Economics, 8th ed. Hoboken, N.J.: Wiley, 2004, Ch. 1.

Chapter 2Supplementary ReadingsFor a review of differential calculus, see:Dowling, Edward T. Mathematics for Economists, 3rd ed. New York: McGraw-Hill, 2000.Chiang, Alpha. Fundamental Methods of Mathematical Economics, 3rd ed. New York: McGraw-Hill, 1984.Mathematical optimization techniques are presented in:Baumol, William J. Economic Theory and Operations Analysis, 4th ed. Englewood Cliffs, N.J.: Prentice-Hall, 1977.Salvatore, Dominick. Microeconomics: Theory and Applications, 4th ed. New York: Oxford University Press, 2003, mathematical appendix.Silberberg, Eugene. The Structure of Economics: A Mathematical Analysis. New York: McGraw-Hill, 1990.Benchmarking is discussed in:Bogan, Christopher E., and Michael J. English. Benchmarking for Best Practices: Winning Through Innovative Adaptations. New York: Mc-Graw-Hill, 1994.

Total quality management is examined in:Easton, George S., and Sherry L. Jarrell. "The Effects of Total Quality Management on Corporate Performance: An Empirical Investigation." Journal of Business, no. 2 (1998), pp. 253-307.Rosett, Joshua G., and Richard N. Rosett. "Characteristics of TQM: Evidence from the TIT/USA Today Quality Cup Competition," NBER, Working Paper No. 7241, July 1999.Grand, R. M., R. Shani, and R. Krishnan. "TQM's Challenge to Managerial Theory and Practice." Sloan Management Review (Winter 1994), pp. 25-35.For reengineering, see:Hammer, R. M., and J. Champy. Reengineering the Corporation: A Manifesto for Business Revolution. New York: HarperBusiness, 1993.Hammer, Michael R. Beyond Reengineering: How the Process-Centered Organization Is Changing Our Work and Our Lives. New York: HarperCollins, 1997.The learning organization is examined in:Becker, B. E., M. A. Huselid, and D. Ulrich. The HR Scorecard: Linking People, Strategy and Performance. Boston: Harvard University Press, 2001.Nevis, E. C., A. J. DiBella, and J. M. Gould: "Understanding Organizations as Learning Systems." Sloan Management Review (Winter 1995), pp. 73-85.Senge, P. The Fifth Discipline Fieldbook. New York: Doubleday, 1994.Senge, P., et al. The Dance of Change: The Challenge of Sustaining Momentum in a Learning Organization. New York: Double Currency, 1999.Storey, J. Human Resource Management: A Critical Text. London: Thomson Learning, 2001.The utilization of popular management tools is discussed in:Hammer, M. "Process Management and the Future of Six Sigma." MIT Sloan Management Review (Winter 2002), pp. 26-32.Rigby, D. "Management Tools and Techniques." California Management Review (Winter 2001), pp. 139-160.

Chapter 3Supplementary ReadingsFor a more extensive problem-solving approach to demand theory, see:Salvatore, Dominick. Theory and Problems of Microeconomic Theory. 3rd ed. Schaum Outline Series. New York: McGraw-Hill, 1992, Chaps. 2-5.The complete presentation of consumer demand theory is found in:Salvatore, Dominick. Microeconomic Theory and Applications, 4th ed. New York: Oxford University Press, 2003, Part II (Chaps. 3, 4, and 5).For consumer demand theory based on the characteristics of goods, see:Lancaster, Kelvin. Consumer Demand: A New Approach. New York: Columbia University Press, 1971.A more advanced and mathematical presentation of demand theory is found in:

Mas-Colell, Andreu, Michael D. Whinston, and Jerry R. Green. Microeconomic Theory. New York: Oxford University Press, 1995, Chaps. 1-4.For e-commerce, see:Choi, Soon-Yong, Dale O. Stahl, and Andrew B. Whiston. The Economics of Electronic Commerce. New York: Macmillan Technical Publishing, 1997.Tapscott, Don, Alex Lowy, David Ticol, and Nata Klym, eds. Blueprint to the Digital Economy: Wealth Creation in the Era of E-Business. New York: McGraw-Hill, 1998.PricewaterhouseCoopers. E-Business Technology Forecast. (Menlo Park, CA: PricewaterhouseCoopers, 1999.

Chapter 4Supplementary ReadingsFor a classical discussion on demand estimation, see:Schultz, Henry Theory and Measurement of Demand Chicago: University of Chicago Press, 1964.Working, E. J. "What Do Statistical 'Demand Curves' Show?" Quarterly Journal of Economics (1927).The use of regression analysis in demand estimation is discussed in:Pindyck, Robert S., and Daniel L. Rubinfeld Econometric Models and Economic Forecasts. Boston: McGraw-Hill, 1998.Salvatore, Dominick and Derrick Reagle. Theory and Problems of Statistics and Econometrics. 2nd ed. Schaum Outline Series. New York: McGraw-Hill, 2002), Chaps. 7-10.A discussion of marketing approaches to demand estimation is found in:DeJong, Douglas V., and Robert Foresythe "A Prospective on the Use of Laboratory Market Experimentation in Auditing Research," Accounting Review (January 1992).Nevin, J. R. "Laboratory Experiments for Establishing Consumer Demand: A Validation Study," Journal of Marketing Research (August 1974).Peppers, Don, Martha Rogers, and Robert Dorf The One-to-One Fieldbook: The Complete Toolkit to Implement a 1 to 1 Marketing Program. New York: Currency/ Doubleday, 1999.Pessemier, E. A.: "An Experimental Method for Estimating Demand." Journal of Business (October 1960).For empirical estimates of demand utilizing regression analysis, see:Houthakker, H. S., and L. D. Taylor Consumer Demand in the United States: Analyses and Projections. Cambridge, Mass.: Harvard University Press, 1970.For empirical estimates of demand for exports and imports, see:Salvatore, Dominick International Economics 8th ed. Hoboken, N.J.: Wiley, 2003, Chaps. 16 and 17.

Chapter 5Supplementary ReadingsA discussion of the forecasting techniques examined in this chapter is found in:

Campbell, John Y., Andrew W. Lo, and A. Craig MacKinlay. The Econometrics of Financial Markets Princeton, N.J.: Princeton University Press, 1997.Granger, C. W. Forecasting in Economics and Business. New York: Academic Press, 1989.Pindyck, Robert S., and Daniel L. Rubinfeld Econometric Models and Economic Forecasts. Boston: McGraw-Hill, 1998.For qualitative forecasting, see:Dunkelberg, W. C. "The Use of Survey Data in Forecasting." Business Economics, vol. 21 January 1986.A more advanced discussion of time-series analysis than presented in this chapter is found in:Granger, C. W., ed. Modeling Economic Series. Oxford: Oxford University Press, 1990.Hamilton, J. D. Time Series Analysis. Princeton, N.J.: Princeton University Press, 1994.For a discussion of barometric methods, see:Conference Board Business Cycle Indicators. New York, monthly.U.S. Department of Commerce, Bureau of Economic Analysis. Business Conditions Digest. Washington, D.C.: Government Printing Office, monthly.U.S. Department of Commerce, Bureau of Economic Analysis. Survey of Current Business. Washington, D.C.: Government Printing Office, monthly.Walsh, John F. "Sales Forecasting in Cyclical Markets." Business Economics (July 1998)Econometric forecasting is discussed in:Hamilton, J. D. Time Series Analysis. Princeton, N.J.: Princeton University Press, 1994, Chap. 4.Lawrence, D. B. "Managerial Evaluation of Exogenous Forecast Sources." Managerial and Decision Economics (June 1991)Pindyck, R. S., and D. L. Rubinfeld. Econometric Models and Economic Forecasts. Boston: McGraw-Hill, 1998.For more advanced techniques for estimating simultaneous equation models, see:Diebold, Francis X. "The Past, Present, and Future of Macroeconomic Forecasts." The Journal of Economic Perspective (Spring 1998).Hamilton, J. D. Time Series Analysis. Princeton, N.J.: Princeton University Press, 1994, Chap. 9.Pindyck, R. S., and D. L. Rubinfeld. Econometric Models and Economic Forecasts. New York: McGraw-Hill, 1991, Chaps. 11-13.Salvatore, D. and D. Reagle. Theory and Problems of Statistics and Econometrics. 2nd ed. New York: McGraw-Hill, 2002, Chap. 10.For input-output analysis and forecasting, see:Miller, R. E., and P. D. Blair. Input-Output Analysis: Foundations and Extensions. Englewood Cliffs, N.J.: Prentice-Hall, 1985.Mohn, N. C., et al. "Input-Output Modeling: New Sales Forecasting Tool." University of Michigan Business Review (July 1986)U.S. Department of Commerce, Bureau of Economic Analysis. "Annual Input-Output Accounts for the U.S. Economy, 1997." Survey of Current Business (January 2002)

Chapter 6

Supplementary ReadingsFor a more extensive treatment of production theory, see:Baumol, William J. Economic Theory and Operations Analysis Englewood Cliffs, N.J.: Prentice-Hall, 1977, Chap. 11.Salvatore, Dominick Theory and Problems of Microeconomic Theory, 3rd ed. New York: McGraw-Hill, 1992, Chap. 6 and Secs. 8.1-8.3.Other important writings on production theory are:Khurana Anil "Managing Complex Production Processes." Sloan Management Review (Winter 1999), pp. 85-97.Mefford, Robert N. "Introducing Management into the Production Function." Review of Economics and Statistics January-February 1986, pp. 75-81.Womack, J. P. "From Lean Production to Lean Enterprise." Harvard Business Review (March-April 1994), pp. 93-103.On the empirical estimation of production functions, see:Atkinson, S. F., and C. Cornwell: "Estimation of Output and Input Technical Efficiency Using a Flexible Functional Form and Panel Data." International Economic Review (February 1994), pp. 245-255.Douglas, Paul H. "The Cobb-Douglas Production Function Once Again: Its History, Its Testing, and Some New Empirical Values." Journal of Political Economy (October 1984), pp. 903-915.Gold, B. "Changing Perspectives on Size, Scale, and Returns: An Interpretative Survey," Journal of Economic Literature (March 1981), pp. 5-33.For technological progress and international competitiveness, see:Drucker, Peter F. "The Discipline of Innovation," Harvard Business Review (November-December 1998), pp. 149-157.Kim, Chan W., and Renee Mauborgne "Strategy, Value Innovation, and the Knowledge Economy." Sloan Management Review (Spring 1999), pp. 41-54.Porter, M. J. The Competitive Advantage of Nations. New York: Free Press, 1990.Salvatore, Dominick: International Economics, 8th ed. Hoboken, N.J.: Wiley, 2004, Chaps. 6-8, 13.Salvatore, Dominick: The Japanese Trade Challenge and the U.S. Response Washington, D.C.: Economic Policy Institute, 1990.

Chapter 7Supplementary ReadingsFor a more extensive treatment of cost theory, see:Cooper, Robin, and Robert S. Kaplan. "The Promise--and Perils--of Integrated Cost Systems." Harvard Business Review (July-August 1998), pp. 109-119.Salvatore, Dominick. Theory and Problems of Microeconomic Theory. 3rd ed. Schaum Outline Series. New York: McGraw-Hill, 1992, Chap. 7.A discussion of economies of scale and economies of scope in some industries is found in:Aivazian, Varouj A., et al. "Economies of Scale versus Technological Change in the Natural Gas Transmission Industry." Review of Economics and Statistics (August 1987), pp. 556-561.Beston, G. J., G. A. Hanweck, and D. B. Humphrey. "Scale Economies in Banking: A Restructuring and a Reassessment." Journal of Money, Credit, and Banking (November 1982), pp. 435-456.

Gold, B. "Changing Perspective on Size, Scale, and Returns: An Interpretative Essay," Journal of Economic Literature (March 1981), pp. 5-33.Lieberman, Paul M. "Market Growth, Economies of Scale and Plant Size in the Chemical Processing Industries." Journal of Industrial Economics (December 1987), pp. 175-191.Shepherd, William G. The Economics of Industrial Organization. Upper Saddle River, N.J.: Prentice-Hall, 1997, Chap. 7.Teece, David J. "Economies of Scope and the Scope of the Enterprise." Journal of Economic Behavior and Organization (September 1980), pp. 223-247.The learning curve is discussed in:Argote, Linda, and Dennis Epple. "Learning Curves in Manufacturing." Science (February 23, 1990), pp. 920-924.Bailey, C. D., and E. V. McIntyre. "Some Evidence on the Nature of Relearning Curves." Accounting Review (April 1992), pp. 368-378.Benkard, Lanier C. "Learning and Forgetting: The Dynamics of Aircraft Production." National Bureau of Economic Research, Working Paper No. 7127 (May 1999).Gruber, Harald. "The Learning Curve in the Production of Semiconductor Memory Chips." Applied Economics (August 1992), pp. 885-894.For international trade in inputs and the immigration of skilled labor, see:Davidson, W. H., and J. de la Torre. Managing the Global Corporation. New York: McGraw-Hill, 1989.MacCormack, A. D., L. J. Newman III, and D. B. Rosenfield. "The New Dynamics of Global Manufacturing Site Location." Sloan Management Review. (Summer 1994), pp. 69-80.Quinn, James Brian. "Strategic Outsourcing: Leveraging Knowledge Capabilities." Sloan Management Review (Summer 1999), pp. 9-21.Quinn, J. B., and F. G. Hilmer. "Strategic Outsourcing." Sloan Management Review (Summer 1994), pp. 43-67.Salvatore, Dominick. International Economics. 8th ed. Hoboken, N.J.: Wiley, 2004, Ch. 12.Thompson, Arthur A. "Strategies for Staying Cost Competitive." Harvard Business Review (January-February 1984), pp. 110-117.For supply chain and logistic management, see:Levy, David L. "Lean Production in an International Supply Chain." Sloan Management Review (Winter 1997), pp. 94-102.M. A. Cohen et al. "Saturn Supply-Chain Innovation: High Value in After-Sales Service." Sloan Management Review (Summer 2000), pp. 93-101.For cost-volume-profit analysis and the Japanese cost-management system, see:Cooper, Robin, and Regine Slagmulder. "Develop Profitable New Products with Target Costing." Sloan Management Review (Summer 1999), pp. 23-33.For a discussion of cost curves and estimation, see:Daughety, Andrew F., and Forrest D. Nelson. "An Econometric Analysis of Changes in Cost and Production Structure of the Trucking Industry." Review of Economics and Statistics (February 1988), pp. 67-75.

Johannes, James M., et al. "Estimating Regional Cost Differences: Theory and Evidence." Managerial Decision Economics (June 1985), pp. 70-79.

Chapter 8Supplementary ReadingsFor a more extensive theoretical analysis of perfect competition, monopoly, and monopolistic competition, see:Salvatore, Dominick Microeconomics: Theory and Applications, 3rd ed. New York: Oxford University Press, 2003, Chs. 8 and 9, and Secs. 10.1 and 10.2.Salvatore, Dominick Theory and Problems of Microeconomic Theory, 3rd ed., Schaum Outline Series New York: McGraw-Hill, 1992, Chs. 9 and 10, and Secs. 11.1 to 11.3.Other readings on markets and industrial structure are:Caves, Richard A. "Industrial Organization and New Findings on the Turnover and Mobility of Firms," Journal of Economic Literature (December 1998), pp. 1947-1982.Shepherd, William G. The Economics of Industrial Organization. Upper Saddle River, N.J.: Prentice-Hall, 1997.Fama, Eugene F. "Market Efficiency, Long-Term Returns, and Behavioral Finance," Journal of Financial Economics (September 1998), pp. 283-306.Martin, Stephen "Market Power or Efficiency?" Review of Economics and Statistics (February 1986), pp. 84-95.Slade, M. E. "Static Profitability as a Measure of Deviations from the Competitive Norm," Managerial and Decision Economics (June 1986), pp. 113-118.Porter, Michael "The Competitive Advantage of Nations." Harvard Business Review (March-April 1990), pp. 73-93.The ground-breaking works on monopolistic competition and its evaluation are:Chamberlin, Edward H. The Theory of Monopolistic Competition Cambridge, Mass.: Harvard University Press, 1962, Chaps. 4 and 5.Stigler, George Five Lectures on Economic Problems New York: Macmillan, 1950, pp. 12-24.Cohen, Kalman, and Richard Cyert Theory of the Firm. Englewood Cliffs, N.J.: Prentice-Hall, 1975, pp. 225-230.For the economic effects of product variation and advertising, see:Lancaster, Kelvin "Competition and Product Variety." Journal of Business (July 1980), pp. S79-S105.Comanor, William S., and Thomas A. Wilson "The Effect of Advertising on Competition: A Survey," Journal of Economic Literature (June 1979), pp. 453-476.Stansell, R. S., C. P. Harper, and R. P. Wilder. "The Effects of Advertising Expenditures: Evidence from an Analysis of Major Advertisers." Review of Business and Economic Research (Fall 1984), pp. 86-95.Stigler, George J. "The Economics of Information." Journal of Political Economy (June 1961), pp. 213-225.Stageman, Mark "Advertising in Competitive Markets." American Economic Review (March 1991), pp. 210-233.

Feinberg, Fred M., Barbara E. Kahn, and Leig McAlister "Market Share Response When Consumers Seek Variety." Journal of Marketing Research (May 1992), pp. 227-237.For the effect of international competition and imports on domestic demand, supply, and prices, see:Salvatore, Dominick International Economics. 8th ed. Hoboken, N.J.: Wiley, 2004, Sec. 4.2.Goldberg, Pinelopi, and Michael M. Knetter. "Goods Prices and Exchange Rates: What Have We Learned?" NBER Working Paper No. 5862, December 1996.A detailed discussion of the foreign exchange market and exchange rate determination is found in:Salvatore, Dominick International Economics. 8th ed. Hoboken, N.J.: Wiley, 2004, Ch. 14.

Chapter 9Supplementary ReadingsFor a more extensive theoretical analysis of perfect competition, monopoly, and monopolistic competition, see:Salvatore, Dominick. Microeconomics: Theory and Applications. 4th ed. New York: Oxford University Press, 2003, Chap. 11.Salvatore, Dominick. Theory and Problems of Microeconomic Theory. 3rd ed. Schaum Outline Series. New York: McGraw-Hill, 1992, Secs. 11.4 to 11.12 and 12.1 to 12.3.For the theory of contestable markets, see:Baumol, William J. "Contestable Markets: An Uprising in the Theory of Industrial Structure." American Economic Review (March 1982), pp. 1-5.Baumol, William J., John C. Panzar, and Robert D. Willig. Contestable Markets and the Theory of Industrial Structure. San Diego: Harcourt Brace Jovanovich, 1982.Shepherd, William G. "Contestability vs. Competition." American Economic Review (September 1984), pp. 572-587.Oligopoly and the structure of U.S. industry are examined in:Adams, Walter, ed. The Structure of American Industry. 8th ed. New York: Macmillan, 1996.Shephard, William G. The Economics of Industrial Organization. Upper Saddle River, N.J.: Prentice-Hall, 1997.Caves, Richard. "Industrial Organization and New Findings on the Turnover and Mobility of Firms." Journal of Economic Literature (December 1998), pp. 1947-1982.Stiglitz, J., and G. F. Mathewson, eds. New Developments in the Analysis of Market Structure. Cambridge, Mass.: MIT Press, 1986.Global corporations and their strategic behavior are examined in:Porter, M., ed. Competition in Global Industries. Boston: Harvard Business School, 1986.Porter, M. The Competitive Advantage of Nations. New York: Free Press, 1990.Salvatore, Dominick. International Economics. 8th ed. Hoboken, N.J.: Wiley, 2004, Chs. 8 to 10.For the architecture of the ideal firm, see:Craumer, Martha. "How to Think Strategically about Outsourcing." Harvard Management Update (May 2002), pp. 4-6.

Dutton, Gale. "What Business Are We In?" Management Review (September 1997), pp. 54-57.Gary, Loren. "Where Does the Competitive Advantage Lie?" Harvard Management Update (July 2002), p. 12.Gary, Loren. "Strategy: Separating the Essential from the Expendable." Harvard Management Update (July 2002), pp. 1-2.Goold, Michael, and Andrew Campbell. "Do You Have a Well-Designed Organization?" Harvard Business Review (March 2002), pp. 117-124.Huang, Jeffrey. "A New Blueprint for Business Architecture." Harvard Business Review (April 2001), pp. 149-158.Quinn, James Brian. "Strategic Outsourcing: Leveraging Knowledge Capabilities." Sloan Management Review (Summer 1999), pp. 9-21.Zook, Chris. "Desperately Seeking Growth: The Virtues of Tending to Your Core." Harvard Management Review (June 2001), p. 10.The virtual corporation and relationship enterprises are examined in:Dyer, Jeffrey H., and Prashant Kale. "How to Make Strategic Alliances Work." MIT Sloan Management Review (Summer 2001), pp. 37-43.Freidheim, Cyrus F. "The Battle of the Alliances." Management Review (September 1999), pp. 46-51.Gordon, Mark, and Julie Salganik. "Making Alliances Work: Improving 'Return on Relationship." Global Finance (September 2001), pp. 73-74.Gulati, R., N. Hohria, and A. Zaheer. Strategy Networks." Strategic Journal Management (March 2000), pp. 203-216.Hacki, Reno, and Julian Leighton. "The Future of the Network Company." The McKinsey Quarterly, no. 3 (2001), pp. 21-27.Hammer, Michael. "The Superefficient Company." Harvard Business Review (September 2001), pp. 82-91.Storey, John. "When Internal Boundaries Become Network Relationships." Financial Times (November 19, 2001), pp. 6-7.Wardell, Charles. "The Art of Managing Virtual Teams: Eight Key Lessons." Harvard Business Review (November 1998), pp. 4-5.

Chapter 10Supplementary ReadingsThe original work that introduced game theory to economist isVon Neumann, John, and Oskar Morgenstern. Theory of Games and Economic Behavior. Princeton, N.J.: Princeton University Press, 1944.More recent presentations of game theory and with applications to economics are found in:Friedman, James W. Game Theory with Applications to Economics. New York: Oxford University Press, 1990.Fudenberg, Drew, and Jean Tirole. Game Theory. Cambridge, Mass.: MIT Press, 1991.Besenko, David, and David Dranove and Mark Stanley. The Economics of Strategy. New York: Wiley, 1996.Camerer, C. "Progress In Behavioral Game Theory." Journal of Economic Perspectives (Summer 1997), pp. 159-174.Dutta, Prajit K. Strategies and Games. Cambridge, Mass.: MIT Press, 1999.For repeated games, see:

Axelrod, R. The Evolution of Cooperation. New York: Basic Books, 1984.Strategic moves are examined in:Schelling, Thomas C. The Strategy of Conflict. New York: Oxford University Press, 1960.Porter, Michael E. Competitive Strategy. New York: Free Press, 1980.A detailed analysis of the use of excess capacity to deter entry is found in:Tirole, Jean. The Theory of Industrial Organization. Cambridge, Mass.: MIT Press, 1988.For strategic moves to increase the international competitiveness of nations, see:Porter, Michael E. The Competitive Advantage of Nations. New York: The Free Press, 1990.Krugman, Paul. "Is Free Trade Passe?" Journal of Economic Perspectives (Fall 1987), 131-144.Salvatore, Dominick. The Japanese Trade Challenge and the U.S. Response. Washington, D.C.: The Economic Policy Institute, 1990.

Chapter 11Supplementary ReadingsReadings on pricing are:Blinder, A. S. "Why Are Prices Sticky? Preliminary Results from an Interview Study." American Economic Review (May 1991), pp. 89-96.Corts, K. S. "Third-Degree Price Discrimination in Oligopoly: All-Out Competition and Strategic Commitment." Rand Journal of Economics (Summer 1998), pp. 306-323.Hanson, W. "The Dynamics of Cost-Plus Pricing." Managerial and Decision Economics (March-April 1992), pp. 149-161.Hess, J. D., and E. Gerstner. "Price-Matching Policies: An Empirical Case." Managerial and Decision Economics 12 (1991), pp. 305-315.Layson, S. K. "Third-Degree Price Discrimination under Economies of Scale." Southern Economic Journal (October 1994), pp. 323-327.Levy, D., et al. "Price Adjustment at Multiproduct Retailers." Managerial and Decision Economics 19 (1998), pp. 81-120.Manes, Rene P., Francoise Shoumaker, and Peter A. Silhan. "Demand Relationships and Pricing Decisions for Related Products." Managerial and Decision Economics (June 1984), pp. 120-122.Rao, Vithala R. "Pricing Research in Marketing: The State of the Art," Journal of Business (January 1984), pp. 53-60.On transfer pricing, see:Casey, M. P. "International Transfer Pricing," Management Accounting (October 1985), pp. 31-35.Eccles, R. G. The Transfer Pricing Problem: A Theory for Practice. Lexington, Mass.: D. C. Heath, 1985.Gresik, T. A. "The Taxing Task of Taxing Transnationals." Journal of Economic Literature (September 2001), pp. 800-838.Kant, C. "Foreign Subsidiary, Transfer Pricing and Tariffs." Southern Economic Journal (July 1988), pp. 162-170.Kim, S. H. "International Transfer Pricing." In R. Z. Aliber and R. W. Click, eds., Readings and International Business. Cambridge, Mass.: MIT Press, 1993, pp. 407-421.

Mataloni, R. J. "An Examination of Low Rates of Return on Foreign-Owned U.S. Companies." Survey of Current Business (March 2000), pp. 5-73.OECD. Transfer Pricing and Multinational Enterprises. Paris, 1979.OECD. Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations: 1999 Update. Paris, 1999.Prusa, T. J. "An Incentive Compatible Approach to the Transfer Pricing Problem." Journal of International Economics (February 1990), pp. 155-172.Rugaman, A. M., and L. Eden, eds. Multinationals and Transfer Pricing. New York: St. Martin's, 1985.For a more extensive discussion of international price discrimination and dumping, see:Salvatore, Dominick International Economics. 8th ed. Hoboken, N.J.: Wiley, 2004, Ch. 9. See also the references for Chs. 9 and 10.

Chapter 12Supplementary ReadingsThe topics examined in this chapter are also discussed in:Viscusi, W. Kip, John M. Vernon, and Joseph E. Harrington. Economics of Regulation and Antitrust. Cambridge, Mass.: MIT Press, 2000.For government regulations that restrict competition, see:Buchanan, James, and G. Tullock. The Calculus of Consent. Ann Arbor: University of Michigan Press, 1962.Posner, Richard. "Theories of Economic Regulation." Bell Journal of Economics and Management Science (Autumn 1974), pp. 335-358.Stigler, George J. "The Theory of Economic Regulation," Bell Journal of Economics and Management Science (Spring 1971), pp. 3-21.Externalities are examined in:Bator, Francis M. "The Anatomy of Market Failure." Quarterly Journal of Economics (August 1958), pp. 351-379.Coase, Ronald R. "The Problem of Social Costs." Journal of Law Economics (October 1960), pp. 1-44.Crooper, M. L., and W. E. Oats, "Environmental Economics: A Survey." Journal of Economic Literature (June 1992), pp. 675-740.Gray, Wayne B., and Ronald J. Shadbegian. "Environmental Regulation, Investment Timing, and Technology Choice." Journal of Industrial Economics (June 1998), pp. 235-256.Misham, Ezra J. "The Postwar Literature on Externalities: An Interpretative Essay." Journal of Economic Literature (March 1971), pp. 395-409.Schmalensee, Richard, et al. "An Interim Evaluation of Sulfur Dioxide Emissions Trading." The Journal of Economic Perspectives (Summer 1998) pp. 69-88.For public utility regulation, see:Averch, Harvey, and Leland Johnson. "Behavior of the Firm under Regulatory Constraint." American Economic Review (December 1962), pp. 1052-1069.Kahn, Alfred E. The Economics of Regulation. New York: Wiley, 1971.

Phillips, Charles F. The Regulation of Public Utilities. Arlington, Va.: Public Utilities Report, 1984.An evaluation of regulation and the deregulation movement is found in:Crandall, Robert W. "Surprises from Telephone Deregulation and AT&T Divestiture." American Economic Review, (May 1988) pp. 323-334.Kahn, Alfred E. "Surprises of Airline Deregulation." American Economic Review, (May 1988), pp. 316-322.Peltzman, Sam, "The Economic Theory of Regulation after a Decade of Regulation." Brookings Papers on Economic Activity (1989), pp. 2-41.Viscusi, W. K. "Economic Foundations of the Current Regulatory Reform Efforts." Journal of Economic Perspectives, (Summer 1996), pp. 119-134.Winston, Clifford. "U.S. Industry Adjustment to Economic Deregulation." Journal of Economic Perspectives (Summer 1998), pp. 89-110.For regulation of internal trade, see:Fox, Eleonor M. "Antitrust Regulation across National Borders: The United States of Boeing versus the European Union of Airbus." Brookings Review (Winter 1998), pp. 30-32.Salvatore, Dominick. International Economics, 8th ed. Hoboken, N.J.: Wiley, 2004, Chs. 8--9.Salvatore, Dominick, ed. Protectionism and World Welfare. New York: Cambridge University Press, 1993.

Chapter 13Supplementary ReadingsFor the measuring of risk with probability distributions, see:Bromiley, P. "Testing a Causal Model of Corporate Risk Taking and Performance." Academy of Management Journal (March 1991), pp. 37-59.Salvatore, Dominick, and Derrick Reagle. Theory and Problems of Statistics and Econometrics. 2d ed. New York: McGraw-Hill, 2002, Chs. 2 and 3.Skaperdas, S. "Conflicts and Attitudes toward Risk." American Economic Review (May 1991), pp. 116-120.Weiss, Neil A. Introductory Statistics. Reading, Mass.: Addison Wesley Longman, 1999, Chs. 4-7.Utility theory and risk aversion are discussed in:Machina, M. "Choice under Uncertainty: Problems Solved and Unsolved." Journal of Economic Perspectives (Summer 1987), pp. 121-154.Schoemaker, P. J. H. "The Expected Utility Model: Its Variants, Purposes, Evidence and Limitations." Journal of Economic Literature, vol. 20, 1982.For adjusting the valuation model for risk, see:Butler, J. S., and Barry Schachter. "The Investment Decision: Estimating Risk and Risk-Adjusted Discount Rates." Financial Management (Winter 1989), pp. 13-22.Sick, Gordon. "A Certainty-Equivalent Approach to Capital Budgeting." Financial Management (Winter 1986), pp. 23-32.A discussion of decision trees is found in:

Hespos, Richard F., and Paul A. Strassman. "Stochastic Decision Trees for the Analysis of Investment Decisions." Management Science (1965).Magee, John F. "Decision Trees for Decision Making." Harvard Business Review, vol. 42 (1964).Sharpe, Paul, and Tom Keelin. "How SmithKline Beecham Makes Better Resource-Allocation Decisions." Harvard Business Review (March-April 1998), pp. 45-57.For decision making under uncertainty, see:Markowitz, Harry. Portfolio Selection: Efficient Diversification of Investments. New York: Wiley, 1959.Sauer, Raymond D. "The Economics of Wagering Markets." Journal of Economic Literature (December 1998), pp. 2021-2064.Von Neumann, John, and Oskar Morgenstern. Theory of Games and Economic Behavior. 3rd ed. Princeton, N.J.: Princeton University Press, 1953.Foreign-exchange risks and hedging are examined in:Salvatore, Dominick. International Economics. 8th ed. Hoboken, N.J.: Wiley, 2004, Ch. 14.On the relationship between risk and information, see:Ackerlof, George A. "The Market for 'Lemons': Qualitative Uncertainty and the Market Mechanism." Quarterly Journal of Economics (August 1970), pp. 488-500.Miller, Kent D. "Economic Exposure and Risk Management." Strategic Management Journal (May 1998), pp. 497-514.Pauly, Mark V. "Taxation, Health Insurance, and Market Failure in the Medical Economy." Journal of Economic Literature (June 1986), pp. 629-675.Stiglitz, J. E. "The Causes and Consequences of the Dependence of Quality on Price." Journal of Economic Literature (March 1987), pp. 1-48.

Chapter 14Supplementary ReadingsA general discussion of capital budgeting is found in:Bierman, H., and S. Smidt. The Capital Budgeting Decision. New York: Macmillan, 1988.Gitman, Lawrence. Principles of Managerial Finance. 9th ed. Reading, Mass.: Addison-Wesley, 2000, Chs. 5, 8-9. Howarth, R. B., and R. B. Norgaard. "Environmental Valuation under Sustainable Development." American Economic Review (May 1992), pp. 473-477.Kwan, Clarence, and Yufei Yuan. "Optimal Sequential Selection in Capital Budgeting: A Shortcut." Financial Management (Spring 1988), pp. 54-59.Luehrman, Timothy. "Using APV: A Better Tool for Valuing Operations." Harvard Business Review (May-June 1997), pp. 145-154.Miller, Edward M. "The Competitive Market Assumption and Capital Budgeting Criteria." Financial Management (Winter 1987), pp. 22-28.Mukherjee, Tarun K., and Glenn V. Henderson. "The Capital Budgeting Process: Theory and Practice." Interfaces (March-April 1987), pp. 78-90.

Pollak, Robert A. "Imagined Risk and Cost-Benefit Analysis." American Economic Review Papers and Proceedings (May 1998), pp. 376-380.Ross, Marc. "Capital Budgeting Practices of Twelve Large Manufacturers." Financial Management (Winter 1986), pp. 15-22.The cost of capital is examined in:Fisher, L., and J. H. Lorie. "Rates of Return on Investments in Common Stock: 1926-1965." Journal of Business (July 1968), pp. 291-316.Froot, Kenneth A., and Jeremy C. Stein. "Risk Management, Capital Budgeting, and Capital Structure Policy for Financial Institutions: An Integrated Approach." Journal of Financial Economics (January 1998), pp. 55-82.Harris, M., and A. Raviv. "The Theory of Capital Structure." Journal of Finance (March 1991), pp. 297-355.Harris, R. S. "Using Analysts' Growth Forecasts to Estimate Shareholder Required Rates of Return." Financial Management (Spring 1986), pp. 58-67.Le, Thuan, and Kevin P. Sheehan. "Measuring the Relative Marginal Cost of Debt and Capital for Banks." Federal Reserve Bank of New York Economic Policy Review (October 1998), pp. 45-49.Markowitz, H. M. "Portfolio Selection." Journal of Finance (March 1952), pp. 77-91.Modigliani, F., and M. H. Miller. "The Cost of Capital, Corporation Finance and the Theory of Investment." American Economic Review (June 1958), pp. 261-297.Sick, Gordon A. "A Certainty-Equivalent Approach to Capital Budgeting." Financial Management (Winter 1986), pp. 23-32.Talmor, E., and H. E. Thompson. "Technology, Dependent Investments, and Discounting Rules for Corporate Investment Decisions." Managerial and Decision Economics (March-April 1992), pp. 101-109.For the presentation and evaluation of the capital asset pricing model, see:Bowie, David C., and David J. Bradfield. "Robust Estimation of Beta Coefficients: Evidence from a Small Stock Market." Journal of Business Finance & Accounting (April/May 1998), pp. 439-454.Levy, H. "The Capital Asset Pricing Model." The Economic Journal (March 1983), pp. 145-165.Ross, S. "The Current Status of the Capital Asset Pricing Model." Journal of Finance (June 1982), pp. 895-901.Shanken, J. "The Arbitrage Pricing Model: Is It Testable?" Journal of Finance (December 1982), pp. 1129-1140.For the effect of international interest rate differentials on international competitiveness, see:Hill, Charles W. L. International Business. Boston: Irwin-McGraw-Hill, 1997, Chap. 20.Salvatore, Dominick. International Economics. 8th ed. Hoboken, N.J.: Wiley, 2003, Chs. 14 and 19.