Is Dubai Las Vegas on steroids Essay Example | Topics and Well Written Essays - 3000 words

Is Dubai Las Vegas on steroids - Essay Example This is especially so where the front runners happen to be two great cities, with one resting in the East, that is in the United Arab Emirates (UAE) and the other on the West, that is the United States. The two words, that is, bug and hook have been used symbolically in the description of the mental picture that one has when the two cosmopolitans are mentioned.The mention of the two cities triggers a feeling that is more of an enticement, rather than just a mere attention. The cities are scenarios that capture one’s interests fully.The term bugging is also being used as a slang to signify bulging or growing larger in all dimensions. Dubai and LasVegas both share these two characteristics. From what could be termed as scratch, the two cities have experienced enormous developments in both structural and technological fields, though at different rates, to an alarming level. The following essay gives an outline and a partial analysis of the past, the present and the expected futur e conditions of the cities, their similarities and their differences in terms of social and cultural aspects, and in relation to the definition of freedom. It starts with a description of the history of the two cities. ... Though mainly known for its speedily expanding city, Dubai is also a home to various landscapes ranging from the sand deserts, the coral reefs to the rugged Rock mountains (Quinn, 2006). In history, the Persian Gulf was one of the most relevant trading locations dating back to 3,000BC in the reign of Sumer kingdom, which was a Muslim empire. The kingdom carried out and influenced trade along the Gulf which harbors Dubai, and began civilization with Dubai as one of the trading centers. The trading spot later became an important link between Europe and India to the Portuguese and to the British. Due to numerous attacks by pirates, Dubai and the other neighboring emirates sought protection from the British and this led to the emirates being termed as the Trucial States. At the beginning of the seventeenth century, Dubai’s ruler, who was known as Sheikh Hasher gave a tax relief to the foreign traders. This offered them an incentive to expand their trade by locating their headquart ers to Dubai leading to a boost in development. Some major ports had also been established forming linkages between the trading blocks in the region. An example is the British port which was important in enabling trade between the British and the Indians. A further boost in trade was enhanced by Sheikh Rashid bin Saeed who authorized the dredging of a creek, giving way to larger cargo ships. The city of Dubai was hence born from the trade of imports and exports. This however received a major boost when oil was discovered in 1966. The huge revenues from oil trade transformed the state into one of the richest in the Middle East. When Britain withdrew its reign from the territory,

The importance of strategic information

The importance of strategic information Abstract In a global marketplace, information has emerged as an agent and enabler of new competitiveness for todays enterprise. However the paradigm of strategic planning changes sufficiently to support the new role of information and technology. The question is, are changes can support the new role of information and technology and what is the relationship between strategic information system planning with the development database in an organization. Therefore, the development of strategic information system planning is importance in an organization. Strategic information system planning (SISP) is the process of creating a portfolio based on the use of information system in order to achieve organizational goals and objectives. Within SISP, organizational can clearly define their organizational goals, the critical success factor (CSF) and the problem areas within the organization activity. This article is to discuss the importance of SISP and its relationship with organizational database deve lopment and implementation. Keywords Strategic Information System Planning, SISP, DBMS, CSF, EI Introduction A succeed organization will have proper SISP to drive the organization to achieve their business needs and business goals. For that, SISP is developing to make sure that all activities support organizations business plan and at the same time align with its business needs and business goals. SISP is also use to predict the organization future. Within SISP, organization can avoid from barrier that they predict in a long term planning. Rockart (1979) stated that top management firm doesnt not much interest to the relationship between information system function and corporate strategy. He also said information system is treated as some back-room operation in support of day-to-day operation in an organization. As referred to Lederer A. L ( 1996), strategic information system planning is one of the major issues because of it is often face the failure while implement it. Many applications recommended by strategic information system planning studies are often disregarded while many other applications are implemented. Strategic information system planning is important to an organization because it can influence an organization favorably, and is difficult to accomplish, it is a legitimate target for research. Factor affecting strategic information system planning include top management of IS that are IS managers and chief information officer (CIO) emphasize the importance of their relationship with the Chief Executive Officer (CEO). Those closer to the CEO have a better understanding of the CEOs expectations. It is good to have a good relationship between CIO and other business unit for obtaining understanding and support of current and potential clients. Lack of management commitment and the absence of the control mechanism necessary to ensure the success of the plans can impede its implementation. Strategic Information System Planning According to Lederer and Sethi (1988) in 1980s, the concept of strategic information system planning (SISP) evolved. They come with the two concept of SISP. The first one is SISP viewed as the process of identifying a portfolio of computer based applications that will assist an organization in achieving the business plan and at the same time achieve the business organization goals. Meanwhile the second one is SISP involved searching for application with a high impact and with the ability to create an advantage over competitors to gain competitive advantage. Based on the theory of SISP, it can be define that the process of identifying a portfolio of computer-based applications to be implemented aligned with the corporate strategy and has the ability to create an advantage over competitors. Organization goals is analyze by defining what exactly organization hope in order to accomplish the goals. After organization goals have been analyzed, then critical success factor will evaluated so that it will affect the organization goals and objective in long term. Critical success factor is the element that organization should know and must work in order to survive in the business environmental. And lastly, identify the problem areas which are the weaknesses that organization already have. SISP help organization in overall strategic planning process in effectively and efficiently. Rogerson and Fidler (1994), a study on satisfaction using SISP showed that most organization that used SISP in running their operation more satisfied with the planning process and outcome than those who did not implement specific SISP method. SISP participants include top business, functional area, and information system management. In an organization, the success of IS plan can be determined with the involvement and commitment of senior management. Involvement of senior management is very important to determine whether the success or failure of the project. Senior management was the backlog behind the success of the project. Within SISP also can be used to improve the communication between top management and users regarding IT. This actually gain top management commitment. Communication and commitment will also help in increasingly the visibility of IT in organization. The purpose of SISP is to ensure that the IT organization align with the strategic goals of organization. Alignment of IT organization and business goals has been used to control and ensure that business goals will achieve and all the operation included the IT and IS that used in running the organization will keep in track. As referred to Earl (1993) , SISP alignment will also help in identifying strategic applications, identifying new and higher payback applications, and developing an information architecture. Organizations also use the SISP to help in forecasting and allocating IT resources. With SISP, also can avoid loss of control of IS/IT in an organization. SISP is needed for the system to ensure the system that used in the organization integrated with other system or not. Without SISP in an organization, may lead to missed opportunity, duplicate system, incompatible system and wasted resources. Importance of Strategic Information System Planning The importance of SISP in an organization has been well documented within the IS literature. Within SISP, the integration of IS function within organization can be facilitate. Besides, SISP supports the identification of opportunities to use information systems for strategic purpose. SISP also ensures that adequate resources or the use of scarce resources are allocated to critical application and the use of resources in properly manner. With SISP, can ensures that the IS function support the organizational goals and objectives and also the activities at every level. Having a good strategic information system planning in organization, will determine whether the organization will success or failure. The reason why organization needs good strategic information system planning is that it can help organization to avoid misused of scarce resources. By planning, only projects that can generate good returns will get investors from the firm. A good planning is very important to avoid problem such as the misuse and wasted resources in form of system that nobody likes and used the system effectively. When a new system developed, pre-existing system can be used to communicate or interface properly and at the same time avoid the problem of Islands of automation. This can be happen if the organization has proper planning for their organization. Before develop a new system, planning is very important to make sure the smooth of business operation. First of all, the organization should identify their needs. Development of system should be a response to need whether at the transaction processing level or at the more complex information and support system levels. Priorities, objectives and authorization for information system projects need to be formalized first. The system development plan should identify the project resources that needed the procedures, and constraints for each application area. Planning should be flexible to adjust the priorities if necessary. Furthermore, to facilitate understanding of each application the plan must be specific enough. According to King, (King, 1995) in his article has argued that a strategic capability architecture mu st flexible and continuously improving infrastructure of organizational capabilities and at the same time gain companys sustainable competitive advantage. It is important to have SISP to maximize the benefits of changing technology and to take account of the different viewpoints of business professionals and IT professionals. System investments are made to support business objectives and also to gain inadequate infrastructure. SISP is important because it emphasizes the need to bring IT to bear on and sometimes influence strategic direction of the corporation is widely accepted by researchers. This is particularly true in contemporary environments where harnessing the power of technology resources could be critical for competitiveness. Relationship with Organizational Database Development Data are the raw material from which information is produced. Therefore, it is not surprising that in todays information-driven environment, data are a valuable asset that requires careful management. To access datas monetary value, data that stored in company database are data about customers, suppliers, inventory, and operations and so on. Imagine that all the data in the database loss. What will happen if the situation like that happen? Data loss puts any company in a difficult position. The company might be unable to handle daily operation effectively; it might be faced with the loss of customers who require quick and efficient service, and it might lose the opportunity to gain new customers. Data are a valuable resource that can translate into information. If the information is accurate and timely, it is likely to trigger action that enhance the companys competitive position and generate wealth. In effect, an organization is subject to a data information decision cycle; that is the data user applies intelligence to data to produce information that is the basis of knowledge used in decision making by the user. A critical success factor of an organization is efficient asset management. Critical success factor involve the management in an organization to know the current status of the organization in ICT. Based on the analysis of the business environment of the corporation, the critical success factors concerning the firm are identified. Critical success factor is refer to the limited number of area in which result, if satisfactory will ensure successful competitive performance for the organization. There are such area where things must go right for the business to flourish. Thus, the factor that are critical for accomplishing the objectives are identified at this stage. To manage data as a corporate asset, managers must understand the value of information that is processed data. Data are used by different people in different departments for different reasons. Therefore, data management must address the concept of shared data. Whatever the type of organization, the database predominant role is to support managerial decision making at all level in the organization. Thats why, SISP play a big role in organization. SISP is an important management function. It can help an organization use information technology (IT) more competitively, identify new, higher payback IT applications, and better forecast IT resources requirements. An organizations managerial structure might be divided into three levels which are top, middle and operational. Top level management makes strategic decisions; middle management makes tactical decisions and operational management make daily operational decisions. Operational decisions are short terms and affect only daily operations for example deciding to change the price of a product to clear it from inventory. Tactical decision involve a longer time frame and after larger scale operation; for example changing the price of a product in response to competitive pressures. Strategic decisions are those that affect the long term well-being of the company or even its survival; for example changing pricing strategy across product lines to capture market share. This shows that having a good SISP will lead the organization to achieve the goal and objective in short or long term in an organization. Database : Special Consideration The companys database is also known as the corporate or enterprise database. The enterprise database might be defined as the companys data representation that provides support for all present and expected future operations. Most of todays successful organization depends on the enterprise database to provide support for all of their operations from design to implementation to sales and services and from strategic planning to daily decision making. Having a computerized database management system does not guarantee that the data will be properly used to provide the best solution required by managers. A DBMS is just a tool for managing data and must be used effectively to produce the desired result. The introduction of a DBMS represents a big change and challenge. Throughout the organization, the DBMS is likely to have a profound impact, which might be positive or negative depending on how it administered. For example, one key consideration is adapting the DBMS to the organization rather than forcing the organization to adapt to the DBMS. The main issues should be the organizations needs rather than the DBMSs technical capabilities. However, the introduction of a DBMS cannot be accomplished without affecting the organization. The flood of new DBMS generated information has a profound effect on the way the organization functions and, therefore, on its corporate culture. The introduction of a DBMS into an organization requires careful planning to create an appropriate organizational structure to accommodate the person or people responsible for administering the DBMS. The organizational structure must also be subject to well developed monitoring and controlling functions. The administration personnel must have excellent interpersonal and communication skill combined with broad organizational and business understanding. Top management must be committed to the new system and must define and support the data administration functions, goals, and roles within the organization and that also the need of SISP in an organization. In the database development process, there have importance elements in order to develop the database. First, we need to identify the strategic planning factors. The strategic planning factors are in term of the goals of organization that want to achieve, the critical success factor and the problem areas in achieving the goals. In 80s and 90s, there has been a growing realization of the need to make information system of strategic information to an organization. In order to put the planning for strategic information system in perspective the evolution of information systems according to the three era model of John Ward, et al. (1990) is pertinent. According to this model, there are three distinct, albeit overlapping, eras of information system, dating back to the 60s. The relationship over time of the three eras of information system is shown in table 1: Data processing, management information system and strategic information system need to be planned and manage effectively and efficiently. Strategic information system needs to cater to the strategic demand of organization. For example, serving the business goals and creating competitive advantage as well as meeting their data processing and MIS needs. The key point is, as I just said before, organization need to have proper planning not only as tools for cutting cost but as means to adding value. Database Development and Implementation. For a company to succeed, its activities must be committed to its main objectives or mission. Therefore, regardless of a companys size, a critical step for any organization is to ensure that its information system supports is strategic plan for each of its business areas. The database administration strategy must not conflict with the information systems plans. After all, the information system plans are derived from a detailed analysis of the companys goal, its condition or situation and its business needs. Several methodologies are available to ensure the compatibility of data administration and information systems plans and to guide the strategic plan development. The most commonly used methodology is known as information engineering. Information engineering (IE) allows for the translation of the companys strategic goals into the data and application that will help the company achieve those goals. IE focuses on the description of the corporate data instead of the process. The IE rational is simple; business data type tends to remain fairly stable and do not change much during their existence. In contrast, processes change is often and thus require the frequent modification of existing system. By placing the emphasize on data, IE helps decrease the impact on systems when process change. The output of IE process is an Information system architecture (ISA) that serves as the basis for planning, development, and control of the future information system. Conclusion Linking IS to business goals is the heart of IS planning and without this link, the IS function will not have major relevance for the organization. Choosing the right planning methodology depends on the current use and spread of technology within the organization and the importance of the current systems. Resources available such as staff, skill, CASE tools, etc. will also impact this process. It appears that the use of more than one methodology should be recommended. While new technology can be advantageous, it can also pose severe problems if the right skills and expertise are not available to use it properly. The success of the overall information system strategy and therefore of the data administration strategy depends on the several critical success factors. Understanding the critical success factor help the database administration (DBA) develops a successful corporate data administration strategy. However, no matter how comprehensive the list of success factor is, it must be based on the notion that development and implementation of a successful data administration strategy are tightly integrated with the overall information system planning activity of the organization. References Lederer, A. L., Salmela, H. (1996). Towards a Theory of Strategic Information System Planning. Journal of Strategic Information System, 5, 237-253. Retrieved February 15, 2010 from: http://www.ingentaconnect.com/content/els/09638687/1996/00000005/00000003/art80005 Doherty, N. F., Marples, C. G., Suhaimi, A. (1999). The Relative Success of Alternative Approaches to Strategic Information System Planning: An Empirical Analysis. Journal of Strategic Information System, 8, 263-283. Retrieved February 15, 2010 from: http://www.sciencedirect.com/science?_ob=ArticleURL_udi=B6VG3-3YSXDH0-4_user=10_coverDate=09%2F30%2F1999_rdoc=1_fmt=high_orig=search_sort=d_docanchor=view=c_searchStrId=1219085305_rerunOrigin=google_acct=C000050221_version=1_urlVersion=0_userid=10md5=d2d5c8bc4cc3daab2e8918f7a7b8e62a Min, S. K., Suh, E. H., Kim, S. Y. (1999). An Integrated Approach Toward Strategic Information System Planning. Journal of Strategic Information System,8, 373-394. Retrieved February 15, 2010 from: http://www.ingentaconnect.com/content/els/09638687/1999/00000008/00000004/art00029 Cerpa, N., Verner, J. M. (1998). Case study: The effect of IS Maturity on Information System Strategic Planning. Information Management, 34, 199-208. Retrieved February 15, 2010 from: http://www.sciencedirect.com/science?_ob=ArticleURL_udi=B6VD0-3VKBF56-1_user=10_coverDate=11%2F02%2F1998_rdoc=1_fmt=high_orig=search_sort=d_docanchor=view=c_searchStrId=1219124246_rerunOrigin=google_acct=C000050221_version=1_urlVersion=0_userid=10md5=eea5fca85d4848200f104d31c4556a53 Chi, L., Jones, K. G., Lederer, A. L., Li, P., Newkirk, H. E. Sethi, V. (2005). Environmental Assessment in Strategic Information System Planning. Internatioanal Journal of Information Management, 25, 253-269. Retrieved February 15, 2010 from: http://www.sciencedirect.com/science?_ob=ArticleURL_udi=B6VB4-4FJTP9R-2_user=10_coverDate=06%2F30%2F2005_rdoc=1_fmt=high_orig=search_sort=d_docanchor=view=c_searchStrId=1219134034_rerunOrigin=google_acct=C000050221_version=1_urlVersion=0_userid=10md5=a68c3bd3f6483c65f80d756b65f6f890 Newkirk, H. E., Lederer, A. L. (2006). The Effectiveness of Strategic Information System Planning Under Environmental Uncertainty. Information Management, 43, 481-501. Retrieved February 15, 2010 from: http://www.sciencedirect.com/science?_ob=ArticleURL_udi=B6VD0-4J8D91T-2_user=10_coverDate=06%2F30%2F2006_rdoc=1_fmt=high_orig=search_sort=d_docanchor=view=c_searchStrId=1219339816_rerunOrigin=google_acct=C000050221_version=1_urlVersion=0_userid=10md5=210513d2a4e3f847ba5201ca6050e807 Grover, V., Segars, A. H. (2005). An Empirical Evaluation of Stages of Strategic Information System Planning: Patterns of Process Design and Effectiveness. Information Management 42, 761-779. Retrieved February 15, 2010 from: http://www.sciencedirect.com/science?_ob=ArticleURL_udi=B6VD0-4DFBX2C-2_user=10_coverDate=07%2F31%2F2005_rdoc=1_fmt=high_orig=search_sort=d_docanchor=view=c_searchStrId=1219352700_rerunOrigin=google_acct=C000050221_version=1_urlVersion=0_userid=10md5=fab4201d9ce3af6fe5493ae377f6dd42 Lederer, A. L., Vijay, S. (1992). Root Causes of Strategic Information System Planning Implementation Problems. Journal of Management Information System. 9 (1), 21-25. Retrieved February 16, 2010 from: http://proquest.umi.com.ezaccess.library.uitm.edu.my/pqdweb?index=15did=1175068SrchMode=1sid=1Fmt=3VInst=PRODVType=PQDRQT=309VName=PQDTS=1266960324clientId=28403 Warr, A. A Study of the Relationship of Strategic IS Planning (SISP) Approaches, Objectives and Context with SISP Success in UK Organizations. Retrieved February 16, 2010 from: http://is2.lse.ac.uk/asp/aspecis/20050059.pdf Pant, S., Hsu, C. (1995). Strategic Information System Planning: A Review. Retrieved February 16, 2010 from: http://viu.eng.rpiscrews.us/publications/strpaper.pdf

Survey of Education Essay -- College University Education Essays

Survey of Education A formal education is a very valuable tool in today’s society. But why is it important, and what exactly makes up an education? I will attempt to explain these question through a variety of ways. As a current University student, I know what my education and college experience means to me, but I also want to know what other students think the purpose of an education is. I will investigate what exactly students learn and have learned at the Uof A. Then I will contrast the thought of traditional and non-traditional students. First to get an accurate picture of the thoughts of UofA students, I had to choose a variety of students. They included both male and female, traditional and non-traditional students. I composed a poll which asked seven questions. Each question was asked on an individual level, and I expected those polled to be able to only answer for themselves. My questions read as followed: 1. Why are you in college and, in particular, at the Uof A? 2. What is you definition of the word education? 3. Do you think you earn an education, receive it, labor over it, or achieve it? 4. What will you get out of your University education? 5. Do you think you needed the college experience as opposed to going straight into the â€Å"real world†? 6. What have you really learned while you’ve been here? 7. What are the benefits of a University education? Now I will first attempt to answer my own questions. Firstly, I am in the University because I think a degree will be essential for the work level which I want to enter. I also have been strongly influenced by my parents in the decision of coming to college. My father has c... ...ey didn’t have a chance to learn earlier. Many non-traditional students have to really struggle over going back to school because they must make time out of their established life. Traditional students can learn a lot from older students. Usually, younger students complain when they have non-traditional students in their classes. This is because the older students tend to ask many questions and really want to understand something before they move on. They are in class because they want to be. Younger kids shouldn’t get frustrated in class when people ask questions and want to learn more about a subject. We, instead should realize that one day we will look back and see you important college was and what an opportunity we had. Traditional students need to take seriously and understand this could be the only time in our lives when we have an opportunity to learn. Survey of Education Essay -- College University Education Essays Survey of Education A formal education is a very valuable tool in today’s society. But why is it important, and what exactly makes up an education? I will attempt to explain these question through a variety of ways. As a current University student, I know what my education and college experience means to me, but I also want to know what other students think the purpose of an education is. I will investigate what exactly students learn and have learned at the Uof A. Then I will contrast the thought of traditional and non-traditional students. First to get an accurate picture of the thoughts of UofA students, I had to choose a variety of students. They included both male and female, traditional and non-traditional students. I composed a poll which asked seven questions. Each question was asked on an individual level, and I expected those polled to be able to only answer for themselves. My questions read as followed: 1. Why are you in college and, in particular, at the Uof A? 2. What is you definition of the word education? 3. Do you think you earn an education, receive it, labor over it, or achieve it? 4. What will you get out of your University education? 5. Do you think you needed the college experience as opposed to going straight into the â€Å"real world†? 6. What have you really learned while you’ve been here? 7. What are the benefits of a University education? Now I will first attempt to answer my own questions. Firstly, I am in the University because I think a degree will be essential for the work level which I want to enter. I also have been strongly influenced by my parents in the decision of coming to college. My father has c... ...ey didn’t have a chance to learn earlier. Many non-traditional students have to really struggle over going back to school because they must make time out of their established life. Traditional students can learn a lot from older students. Usually, younger students complain when they have non-traditional students in their classes. This is because the older students tend to ask many questions and really want to understand something before they move on. They are in class because they want to be. Younger kids shouldn’t get frustrated in class when people ask questions and want to learn more about a subject. We, instead should realize that one day we will look back and see you important college was and what an opportunity we had. Traditional students need to take seriously and understand this could be the only time in our lives when we have an opportunity to learn.

Newspaper article to evaluate Essay

Newspaper article to evaluate and review the purpose of faith schools in multi-faith and multicultural Britain. Faith schools in Britain are schools that teach general national curriculums but using religious principles and aims within their teaching. The extremities of these principles vary between different faiths and different schools. The term â€Å"faith schools† was first used in 1990 when Muslim institutes demanded for more freedom within education. There is approximately 7000 faith schools in Britain, almost a third of all state funded schools with around one and quarter million pupils but many ask if there is any need for such a large number of faith schools in a society that is becoming more secular. In 2006, 197 faith schools made up the 209 primary schools in the UK that achieved â€Å"perfect† results in that year’s league tables. All students reached the expected standard for 11 year olds in English, maths and science. The best school in the tables was North Cheshire Jewish primary school which offers â€Å"a traditional Jewish education†. The most improved school was St Anne’s Roman Catholic primary school whose results tripled within three years. Some would say that faith schools create a â€Å"social sorting† of children according to class, ability, religion and academics. This could be backed up by the fact that faith schools achieve higher exam results on average in the UK. However, the pupils who attend the secondary faith schools who have been to high-achieving primary schools appear to be from more well-off families. As well as this, according to a report for the Government, faith schools only achieve better results as they select the best pupils, not because of their religious ethos thus raising the question in whether if there is a need for faith schools. The Politics Show South has surveyed all the secondary schools in the region and found that 72% of pupils at the region’s faith schools got five good GCSE results, as against a national average of 53. 7% getting five good GCSE results. Four out of five faith schools in the South beat the national average. A parent at the Islamia Primary School in Queen’s Park, North London, also sees cultural advantages for her children in faith schools. â€Å"I wanted them to have a sense of pride as a Muslim but also to be following the English curriculum so that they could hopefully continue on to university and mix with everyone else. â€Å"But at the same time they’d know about Islam from a Muslim and not a Christian point of view. † As well as result statistics, faith schools are also keen on imposing discipline and teaching ethics to students. Some say that â€Å"the force of their religion and faith and the ethos of how to become a good citizen will be there all the time. † This means that students who study at these faith schools may have difficulty indulging in a crime or hating people or doing something which is not like their religious ethos. However a lot of people would agree that the rise of multi faith schools within the country would actually produce more secular societies as the rise in numbers and funding of one particular faith for schools could lead to unsettlement from other faiths. Also, single faith schools can also leave children unequipped to deal with life in mainstream Britain as only select things are taught within single faith schools. Director of National Secular society said: â€Å"If they are moving from restricted communities into a single faith school, they have very little contact with those from the majority community. And then suddenly, when they are 16 they come out into the majority community for the first time and into the workplace. I’m worried about the implications of that.†

Marginal cost Essay

1 Monopoly Why Monopolies Arise? Monopoly is a rm that is the sole seller of a product without close substitutes. The fundamental cause of monopoly is barriers to entry: A monopoly remains the only seller in its market because other rms cannot enter the market and compete with it. Barriers to entry have three main sources: 1. Monopoly Resources. A key resource is owned by a single rm. Example: The DeBeers Diamond Monopoly|this rm controls about 80 percent of the diamonds in the world. 2. Government-Created Monopolies. Monopolies can arise because the government grants one person or one rm the exclusive right to sell some good or service. Patents are issued by the government to give rms the exclusive right to produce a product for 20 years. 3. Natural Monopoly: a monopoly that arises because a single rm can supply a good or service to an entire market at a smaller cost than could two or more rms. A natural monopoly occurs when there are economies of scale, implying that average total cost falls as the rm’s scale becomes larger. Monopoly versus Competition The key di erence between a competitive rm and a monopoly is the monopoly’s ability to control price. The demand curves that each of these types of rms faces is di erent as well. 1. A competitive rm faces a perfectly elastic demand at the market price. The rm can sell all that it wants to at this price. 2. A monopoly faces the market demand curve because it is the only seller in the market. If a monopoly wants to sell more output, it must lower the price of its product. A monopoly’s marginal revenue will always be less than the price of the good (other than at the rst unit sold). 1. If the monopolist sells one more unit, his total revenue (P Q) will rise because Q is getting larger. This is called the output e ect. 2. If the monopolist sells one more unit, he must lower price. This means that his total revenue (P Q) will fall because P is getting smaller. This is called the price e ect. Remember that demand tends to be elastic along the upper lefthand portion of the demand curve. Thus, a decrease in price causes total revenue to increase. Further down the demand curve, the demand is inelastic. In this region, a decrease in price results in a drop in total revenue (implying that marginal revenue is now less than zero). Pro t Maximization The monopolist’s pro t-maximizing quantity of output occurs where marginal revenue is equal to marginal cost. 1. If the rm’s marginal revenue is greater than marginal cost, pro t can be increased by raising the level of output. 2. If the rm’s marginal revenue is less than marginal cost, pro t can be increased by lowering the level of output. Even though MR = MC is the pro t-maximizing rule for both competitive rms and monopolies, there is one important di erence. 1. In competitive rms, P = MR at the pro t-maximizing level of output, P = MC . 2. In a monopoly, P > MR at the pro t maximizing level of output, P > MC . The monopolist’s price is determined by the demand curve (which shows us the willingness to pay of consumers). Question: Why a Monopoly Does Not Have a Supply Curve? 1. A supply curve tells us the quantity that a rm chooses to supply at any given price. 2. But a monopoly rm is a price maker the rm sets the price at the same time it chooses the quantity to supply. 3. The market demand curve tells us how much the monopolist will supply. A Monopoly’s Pro t Pro t = TR ; TC : Also, TR TC Pro t = ; Q Q or Pro t = (P ; ATC ) Q Q: The Welfare Cost of Monopoly The socially e cient quantity of output is found where the demand curve and the marginal cost curve intersect. This is where total surplus is maximized. Because the monopolist sets marginal revenue equal to marginal cost to determine its output level, it will produce less than the socially e cient quantity of output. Public Policies Toward Monopolies 1. Increasing Competition with Antitrust Laws. Antitrust laws are a collection of statutes that give the government the authority to control markets and promote competition. Antitrust laws allow the government to prevent mergers and break up large, dominating companies. (a) The Sherman Antitrust Act was passed in 1890 to lower the market power of the large and powerful rusts† that were viewed as dominating the economy at that time. (b) The Clayton Act was passed in 1914 it strengthened the government’s ability to curb monopoly power and authorized private lawsuits. 2. Regulation. Regulation is often used when the government is dealing with a natural monopoly. Most often, regulation involves government limits on the price of the product. While we might believe that the government can eliminate the deadweight loss from monopoly by setting the monopolist’s price equal to its marginal cost, this is often di cult to do. (a) If the rm is a natural monopoly, its average total cost curve will be declining because of its economies of scale. (b) When average total cost is falling, marginal cost must be lower than average total cost. (c) Therefore, if the government sets price equal to marginal cost, the price will be below average total cost and the rm will earn a loss, causing the rm to eventually leave the market. (d) Therefore, governments may choose to set the price of the monopolist’s product equal to its average total cost. This gives the monopoly zero pro t, but assures that it will remain in the market. Note that there is still a deadweight loss in this situation because the level of output will be lower than the socially e cient level of output. 3. Public Ownership. Rather than regulating a monopoly run by a private rm, the government can run the monopoly itself. However, economists generally prefer private ownership of natural monopolies than public ownership. 4. Do Nothing. Sometimes the costs of government regulation outweigh the bene ts. Therefore, some economists believe that it is best for the government to leave monopolies alone. Question: Should the government break up Microsoft? Price Discrimination Price discrimination is the business practice of selling the same good at di erent prices to di erent customers. Perfect price discrimination describes a situation where a monopolist knows exactly the willingness to pay of each customer and can charge each customer a di erent price. Without price discrimination, a rm produces an output level that is lower than the socially e cient level. If a rm perfectly price discriminates, each customer who values the good at more than its marginal cost will purchase the good and be charged his or her willingness to pay. 1. There is no deadweight loss in this situation. 2. Because consumers pay a price exactly equal to their willingness to pay, all surplus in this market will be producer surplus. Examples of Price Discrimination: 1. Movie Tickets 2. Airline Prices 3. Discount Coupons 4. Financial Aid 5. Quantity Discounts.