Preface5Content9List of abbreviations12List of mathematical and economic variables131 Microeconomics, competition and strategic behaviour171.1 Microeconomics between empirical research, theory and experiments181.2 Markets, demand and supply251.3 Price elasticity and marginal revenues381.4 Summary and key learnings48Recommendations for further reading48Questions for review49Literature492 Customer behaviour, products and network effects532.1 Customer behaviour and decisions on demand542.2 Market delineation and product categories662.3 Network effects and multisided markets832.4 Summary and key learnings94Recommendations for further reading94Questions for review 95Literature953 Decisions under risk and behavioural economics1013.1 Decisions under risk and uncertainty1023.2 Bounded rationality and behavioural economics1163.3 Summary and key learnings131Recommendations for further reading131Questions for review132Literature1334 Firms, competition and innovation1394.1 Firms, objectives and strategies1404.2 Competitive advantage, market structure and firm-specific capabilities1514.3 Competition and innovation1654.4 Summary and key learnings179Recommendations for further reading180Questions for review180Literature1815 Firm size, technology and decisions on production1875.1 Production function and technology1895.2 Short run decisions: diminishing marginal product and productivity1945.3 Long run decisions: technical progress and returns to scale2015.4 Summary and key learnings211Recommendations for further reading212Questions for review212Literature2136 Costs, restructuring and M&A2156.1 Cost functions, decisions and competitiveness2166.2 Short run decisions: Fixed costs and marginal costs2206.3 Long run decisions: adjusting cost structures2256.4 Cost-based competitive advantage and M&A2356.5 Summary and key learnings245Recommendations for further reading246Questions for review246Literature2477 Perfect competition, monopoly and competition policy2497.1 Decisions of a firm under perfect competition2507.2 Producer and consumer surplus as a measure of economic welfare2587.3 Monopoly and dominant firms2637.4 Restraints of competition, competition policy and competition authorities2717.5 Summary and key learnings287Recommendations for further reading287Questions for review288Literature2888 Pricing strategies and price discrimination2938.1 Forms and requirements of price discrimination2948.2 Direct price discrimination and market segmentation2968.3 Indirect price discrimination and two-part tariffs3028.4 Bundling3108.5 Auctions3168.6 Summary and key learnings321Recommendations for further reading322Questions for review322Literature3239 Strategic decision-making and game theory3279.1 Nash equilibria in simultaneous games3309.2 Risk aversion and mixed strategies3429.3 Sequential decisions and commitment3489.4 Summary and key learnings354Recommendations for further reading355Questions for review355Literature35610 Strategic competition in oligopoly35910.1 Capacity decisions and strategies in Cournot competition36210.2 Sequential decisions and strategies under Stackelberg competition37410.3 Pricing decisions and strategies in Bertrand competition37810.4 Strategic competition with product differentiation38510.5 Relevance for competitive strategies39410.6 Summary and key learnings397Recommendations for further reading398Questions for review398Literature400Index403