This comprehensive book applies modern economic principles to study a firm's strategic position. The book integrates insights from the theory of the firm, industrial organization and strategy research while building upon a strong theoretical and empirical foundation familiar to academics working in economics and strategy. The broad sweep of modern economics and strategy research is organized and presented in an appealing format. Many topics dovetail with important current research agendas. In this edition, the authors have completely reworked their discussions of a number of difficult topics, such as "make or buy fallacies", competitor identification, commitment, and strategic positioning. They also introduce a "make or buy issue tree" and an "industry analysis checklist" that readers should find very useful when assessing make or buy decisions and performing five forces analyses.