Economics 188 - Management and the Global Economy

Professor Alan Spearot


Overview and Expectations


In this course, we will study the behavior of firms in the international economy, and the motivations for governments to regulate international commerce.  To do so, we will incorporate the modern theory of the firm within standard models of international trade.  Doing so requires economic theory, so I will expect that everybody give a honest effort in working through the derivations that we cover in class.  Further, we will also cover various empirical studies.  As such, I will expect that students read through these studies in preparation for class.  Finally, we will cover a handful of business case studies to study how individual firms made decisions related to participation in the global economy.


Coursework and Grading


Grading will be based on five components.  There will be three exams that follow critical sections of the course.  Each will be worth 25% of your final grade.  The rest of the grade will be based on a presentation and attendance.  The precise grading breakdown is summarized in the following table:


5% Attendance

5%  Paper Topic

15% Presentation

25% Exam 1

25% Exam 2

25% Exam 3


Cheating will be dealt with harshly.  You will fail the course and be reported for academic misconduct.




Reading and assignments are posted on the webpage.  Readings are linked for download.  Most readings must be downloaded from JSTOR, in which case you must download them from a university computer or be logged into the library prior to download.  Please plan ahead.  If you have a problem with downloading these papers, please let me know.


Business case studies (roughly $4 each) must be downloaded from Harvard Business publishing.  Please use the following link to access the 188 course module:




The assignment is to pick an industry that interests you, and to prepare a presentation summarizing that industry and how it interacts in the global economy.  Who are the major players?  What international expansion strategies did these players choose?  What are the major global policies that affect this industry?   Presentations will be occur during the last week of classes and sections.


Office Hours


My office hours will be 2:30-4:30pm on Mondays.  My office is 459 Engineering 2.  My email is  The Course website is the following:


Office Hours


The teaching assistant for the course will be Cheyney O’Fallon.  His email is  Office hours are Thursdays from 2:30 to 4:30 pm in E2, room 403F.


Exam Re-grades


Exam re-grade requests must be submitted in writing, and only after looking at the answer key.  I reserve the right to re-grade the entire exam during a re-grade.


Course Schedule and readings:








Jan 4 –

Jan 8


Review and Intro

Obama Speech to Export-Import Bank





Modeling Firm Behavior






Firms and Exporting

Bernard, Jenson, Redding, and Schott

Optional Reading:

Helpman 2.1-2.3, 2.7







Jan 11 –

Jan 15


Firms and Exporting


Optional Reading: Helpman 2.1-2.3, 2.7




Transportation Costs







Ben and Jerry's

Harvard Case


Jan 18 –

Jan 22


Policies that affect exporters


Optional Reading: Helpman 2.1-2.3, 2.7





Steel Wars

Harvard Case





Optional Reading: Blonigen, Broda and Weinstein


Jan 25 –

Jan 29

Exam 1

Practice Exam, Answers, Practice Exam 2, Answers

Practice Exam 3, Answers

2013 Exam Answers

2014 Exam  Answers

2015 Exam  Answers



Jan 26th





Which firms invest and why?


2016 Exam Answers

Offshoring of America



Harvard Case

Optional Reading: Helpman 2.4, 3


Feb 1 –

Feb 5


Policies that affect foreign investment

Ireland,  FDI in China, 60 Minutes Video on Tax Havens

Harvard Case

Presentation Topic Due:

Feb 2nd



FDI Case Studies

Walmart in Germany,

Walmart in Mexico

Autos in Mexico

Harvard Case


Feb 8 – Feb 12


Risk in International Markets

Export Failure (Mora)



Feb 15 –

Feb 19

Exam 2

Practice Exam, Answers

Practice Exam 2, Answers

Practice Exam 3, Answers


Exam Answers



Feb 16th


Management Practices

Survey, India, Environment



Feb 22 –

Feb 26


Transfer Pricing



Feb 29 –

Mar 4


GATT/WTO and Trade Agreements

Crowley, EU Bananas



Firms and Policy


Cambodia, Hong Kong



Harvard Cases


Mar 7 –

Mar 11

Presentations in lecture and section



Mar 17,





Final Exam 2015   ANS