Economics of Strategy

Apply rigorous economic analysis to firm strategy decisions

Now in its Eighth Edition, Economics of Strategy applies economic principles directly to the strategic decisions firms face regarding competition, market positioning, and organizational structure. This updated edition features new co-author Michael Powell, who led the chapters on organizational design and the horizontal and vertical boundaries of the firm, strengthening coverage of how firms structure themselves to capture value.

Economics of Strategy grounds strategic analysis in microeconomic theory, industrial organization, and the economics of organizations. The Eighth Edition expands treatment of organizational design alongside firm boundary decisions, providing rigorous frameworks for analyzing competitive dynamics, market entry, pricing strategies, and how internal structure shapes performance. Each chapter connects economic models to real strategic choices.

The book also covers:

• Economic frameworks for evaluating competitive advantage, market positioning, and the sustainability of firm performance over time
• Analysis of horizontal and vertical firm boundaries using transaction cost economics, property rights theory, and related approaches
• Organizational design principles that connect internal incentives, authority structures, and coordination mechanisms to strategic outcomes
• Rigorous treatment of industry analysis, entry and exit decisions, and strategic interaction among competitors in varied market structures
• Real-world applications linking economic models to observable firm behavior, pricing decisions, and competitive strategy formulation

Economics of Strategy serves MBA students, advanced undergraduates in business economics, and practitioners seeking a rigorous economic foundation for strategic decision-making. By grounding strategy in formal economic reasoning, this Eighth Edition equips readers to analyze competitive environments, evaluate firm boundaries, and design organizations that align structure with strategic objectives.