Thanks to feedback from users around the world, Managerial Economics and Business Strategy remains the top selling managerial text in the market. I am grateful to all of you for allowing me to provide this updated and improved product. Before highlighting some of the new features of the seventh edition, I would like to stress that the fundamental goal of the book—providing students with the tools from intermediate microeconomics, game theory, and industrial organization that they need to make sound managerial decisions—has not changed.

This book begins by teaching managers the practical utility of basic economic tools such as present value analysis, supply and demand, regression, indifference curves, isoquants, production, costs, and the basic models of perfect competition, monopoly, and monopolistic competition. Adopters and reviewers also praise the book for its real-world examples and because it includes modern topics not contained in any other single managerial economics textbook: oligopoly, penetration pricing, multistage and repeated games, foreclosure, contracting, vertical and horizontal integration, networks, bargaining, predatory pricing, principal–agent problems, raising rivals’ costs, adverse selection, auctions, screening and signaling, search, limit pricing, and a host of other pricing strategies for firms enjoying market power. This balanced coverage of traditional and modern microeconomic tools makes it appropriate for a wide variety of managerial economics classrooms. An increasing number of business schools are adopting this book to replace (or use alongside) managerial strategy texts laden with anecdotes but lacking the microeconomic tools needed to identify and implement the business strategies that are optimal in a given situation.

This seventh edition of Managerial Economics and Business Strategy has been thoroughly updated but retains all of the content that made previous editions successful. The basic structure of the textbook is unchanged.

CHANGES IN THE SEVENTH EDITION

• All of the class-tested problems from the previous edition, plus over 25 new end-of-chapter problems. Where appropriate, problems from the previous edition have been updated to reflect the current economic climate.
Updated Test Bank available on the Instructor’s Web site in two formats: Computerized (EZ Test) and in Microsoft Word format.
Updated Headlines.
New and updated Inside Business applications.
The financial crisis is reshaping the global economic and regulatory landscape, and it is likely to take years for its ultimate effects on the economy to be fully recognized. In preparing this edition, I have revised the book to ensure that the economic examples presented are timeless and will not grow into “historical examples” as a result of bankruptcies, new legislation, or changes in the country’s taste for regulation. As in previous editions, this edition continues to equip students with the economic tools required to manage businesses and, more generally, to evaluate current events. The virtues of markets, as well as potential market failures, are presented without editorial comment on my part. Adopters of this book have praised this approach, as it provides a positive foundation that permits individual instructors to rigorously discuss current events—including the plethora of political proposals and opinions regarding the financial crisis that emerge each and every day.
Updated Instructor’s Web site that offers full teaching notes and solutions to Memos for the Time Warner case—plus a host of additional supplements. These include over 10 additional full-length cases complete with expanded teaching notes and links to chapter content, complete solutions to all end-ofchapter problems, an updated and expanded electronic test bank, animated PowerPoint presentations, chapter summaries, chapter outlines, the Digital Image Library, and more.
Chapters 1–4 have been revised to include more timely headlines, updated Inside Business applications, and additional in-text examples. Each chapter also contains new end-of-chapter problems, as well as updated versions of the class-tested problems you enjoyed in the previous edition.
Chapter 5 opens with a new Headline and contains updated examples throughout. It also offers a new Inside Business application that shows how to estimate cost functions using regression techniques, as well as updated and new end-of-chapter problems.
Chapter 6 offers updated examples and Inside Business applications. The chapter also includes two new end-of-chapter problems.
Chapter 7 contains thoroughly updated examples and industry data, along with a new Inside Business application that describes the 2007 North American Industry Classification System (NAICS). Additionally, the in-text discussion of horizontal mergers has been revised to reflect current practices at the Federal Trade Commission and Antitrust Division of the U.S. Department of Justice. The chapter also includes two new end-of-chapter problems.