Economic Analysis of Contracts and Organizations



Maxim A. Storchevoy, Senior Lecturer,

Department of Strategic & International Management




45 contact hours; 139 student work hours






Managerial Economics



Aim of the Course:   


How to prevent inefficient and dishonest behavior in markets and companies? There is a general theory of contracts that views all human interactions (economic, political, and social) as contract making, explains why and where people tend to cheat on their partners, and advises how this may be prevented through design of a smart contract. Moreover, this theory assumes that any organization is nothing more than a set of contracts, and, therefore, design of effective organization may be conducted with the help of the same contractual principles. Therefore, in this course you will learn the basic principles of the contract theory and will to apply it to a wide array of real life contracts (sale, leasing, lending, employment, B2B, B2C, etc.) and organizational issues (boundaries of the firm, job design, organizational structure design, hybrid organizations, alliances, remote working, etc.). In the end you will see that principles of contract law and company law are essentially based on the same contract theory and support efficient contractual behavior.



Course Content:       


Part   I. Contract Theory

Topic 1. Rules, Contracts, Opportunism

Topic 2. Unique Good

Topic 3. Bilateral Monopoly

Topic 4. Adverse Selection

Topic 5. Public Good

Topic 6. Moral Hazard

Topic 7. Hold-Up


Part  II. Theory of The Firm

Topic 8. The Nature of the Firm

Topic 9. The Structure of Organization

Topic 10. Vertical Integration

Topic 11. Horizontal Integration

Topic 12. Functional Integration

Topic 13. Related Integration

Topic 14. Conglomerate Integration

Topic 15. Hybrid Forms


Part  III. Business Law

Topic 16. Contract Law

Topic 17. Company Law




Teaching methods:   


Interactive lectures with built-in discussions, real cases analysis, individual research and short essays writing.





  1. Brousseau E., Glachant J-M. (eds.) The Economics of Contracts: Theories and Applications. Cambridge University Press. 2002
  2. Colombo M. G., Delmastro M. The Economics of Organizational Design: Theory and Empirical Insights . London: Palgrave Macmillan. 2008
  3. Brickley J., Smith C. W., Zimmerman J. Managerial Economics & Organizational Architecture. Irwin; McGraw-Hill, 2007. 
  4. Besanko D., Dranove D., Shanley M., Schaefer S. Economics of Strategy, 4th Edition, Wiley, 2007.  



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