The Business of Economics

Abstract

Abstract The first section of the book is concerned with how economics is, and should be used, in business. It stresses that the value of economics lies in being able to provide us with a better understanding of social and commercial issues, rather than help us forecast economic trends. Similarly, it provides a direction for the development of management science as a means of understanding the behaviour of firms. The second section of the book examines the application of economics to the central strategic issues facing firms – their choice of activities and markets. It provides an exposition of the resource‐based theory of strategy, which examines the dynamics of the successes and failures of firms by reference to their distinctive capabilities. The next section develops some broader themes that are suggested by the resource‐base view of strategy that recognizes the importance of corporate personality. This perception implies that large companies are fundamentally social institutions and the economic and social consequences of this result are examined. The final section is a collection of shorter essays, which are designed to illustrate how business economics can be used to analyse a range of individual commercial issues such as pricing positioning and the evolution of industry structure.

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