BMAN31881
ESSAY IN ECONOMIC ANALYSIS II
Due date: 8th / January / 2025.
Word limit: Strictly 2000 words +10%
ESSAY TOPIC I
Mega Firms
A major topic in recent economic literature is the emergence of mega firms - companies that operate in multiple markets, have large market shares around the world, wield enormous market power, and invest heavily in R&D, new technologies, brands, and marketing. In this assignment, you are tasked with writing an essay to:
1. Explore the academic economic literature to characterise mega firms and document key stylized facts about mega firms.
2. Develop a conceptual framework (theory) to explain the rise of mega firms. The framework should:
a) Explain why a firm's quality at birth (in its early years) can shape its future performance and affect its chance of achieving star status.
b) Discuss how static and dynamic scale economies due to technology, global competition, network effects and R&D costs can amplify the effects of a firm's initial success and growth and thereby enable the firm to gain market and grow.
c) Explain the role of various winner-take-most mechanisms that are responsible for the rise of mega firms and highlight the interplay between demand-side (e.g. brands) and supply-side (e.g., R&D) factors in driving these mechanisms.
3. Examine the impact of mega-firms on small and medium firms. How may the rise of mega-firms affect the chances of new firms and small firms to grow and survive? How may small firms scale up and compete with dominant firms?
You must draw on relevant economic concepts and theories to provide a systematic analysis. Failure to use relevant theories can lead to a low mark. It is important to inform your analysis by referring to relevant data and support it using peer-reviewed economic journals.
Several notes and papers will be placed on the course webpage to guide you through your research and help you with the emerging literature on mega firms. One note will specify the marking guidelines in detail. Follow the guidelines to carefully organise the assignment.