Comparison of economic efficiency of the model of perfect competition Essay

Comparison of economic efficiency of the model of perfect competition with that of monopoly markets - Essay Example Moreover, their ability to exploit economies of scale also allows them to sell their products at very low prices which are often less than the cost price of other sellers, thus allowing the larger companies to easily drive them out of the business3. However, monopoly seller, as mentioned earlier, is highly likely not to satisfy the complete demand for its product so that it could charge a premium price. Therefore, the monopoly seller fails to take the full advantage of economies of scale, unlike many firms in monopolistic, perfectly competitive and oligopolistic markets4. Other than technical, allocative and productive inefficiencies, monopolies are also likely to be X-inefficient. American Economist Liebenstein argued that regardless of the level of production, monopolies are always X-inefficient because of the absence of competitive pressures5. Therefore, there costs of production are always higher than it would be within perfectly competitive on even monopolistic markets. The same is true because monopolies sellers are most likely to own technologies, assets, and machines that are not operating at their fullest or which are not needed. Furthermore, they are also likely to overpay people, thus leading to cost inefficiencies6. In presence of competition, firms spend great deal of time and energy over ensuring that they decrease their costs to utmost possible. Consider the example of the US airline industry where strong competitive pressures have forced companies to seek more cost effective pressure. Competition forced Southwest Airlines to create a new business model aimed at cost effectiveness where the company flies its aircrafts for more than 11 hours a day, uses same aircrafts for reducing maintenance and training costs, flies short haul, uses dynamic...This paper is an attempt to explore the economic efficiency outcomes of monopoly markets with that of perfect competition markets. Furthermore, the paper would also attempt to present a possible government policy to improve efficiency within the markets. The focus of policymakers should be at creating policies and programs that facilitate competition within various markets, especially within monopolies markets. However, policymakers should draw a line for their intervention. Even in the worst times, direct government intervention or control is not a viable long-term option for creating efficiency because not only it is inefficient but ineffective. The only policy that governments should pursue is to ensure that monopolistic and oligopolistic markets could move towards a perfectly competitive market. Interestingly, in many cases, it is the existing government policy and structure, which creates the costs and hurdles for new entrants to enter into the market. Therefore, governments all over the world should try to follow the economic models of countries like Hong Kong, Singapore, Australia, New Zealand and Switzerland where the government intervention within the markets is minimal. Furthermore, the cost of starting up a business, running the business and winding up the business are also much lesser than the rest of the world. The focus should be on reducing the excessive costs and time required to start, operate and wind up a business, opening up borders to other companies, facilitating free trade and research and development.

Project Financial Risk Management followed in IT industry enhances the Research Paper

Project Financial Risk Management followed in IT industry enhances the success rates of Projects delivered - Research Paper Example Financial Risk Management in IT Introduction Risks management is in many ways the process of identification, assessment and prioritization of risks, which is then followed by the coordination of all economic resources necessary for the elimination or minimization, monitoring, and control of the probable impacts of uncertain events. It has been found that, risk can come from uncertainties in financial markets, legal liabilities, project failures, accidents, credit risks (Macomber 2003, p. 2). Studies indicate that, there are various project management standards, which have been under development in the project management institute, actuarial societies, ISO standards, and the national institute of standards and technology (Hodgson 2003, p.1). The approaches and objectives of hazard supervision vary greatly dependent on the hazard administration technique applied in the setting of a scheme administration.. In other studies however, hazard administration includes the ranking of the essen tial developments; hazards with the extreme loss are handled first and then the other hazard are handled in a descendent mode in order of precedence. It is pointed out that intangible management usually identifies new types of risks that have about a hundred percent probability but the management ignores because most organizations lack identification capabilities to handle such cases (King 2003, p. 2). It is recorded that relationship risk emanate when inefficient ways of collaboration is experienced. This type of hazard is known to reduce the efficiency of information workforces, effectiveness, service, excellence, product value, and excellence of earnings at the end. Thus, risk management is a subject or process that needs all manner of care to be successful. Literature review From organizational perspective, risks arise most often when businesses pursue opportunities in face of uncertainties, while being compelled by capabilities and cost. In most cases, a challenge comes when it comes to the process of finding a position based on the two dimensions, as it represents in essence itself a risk profile that may be appropriate for the initiative; acceptable to both internal and external stakeholders of the business in question. Studies affirm that, hazard and hazard administration are premeditated in nature. Regarding, information and technology studies show that, software projects have been recognized to be high-risk ventures, which are prone to many failures. Some studies argue that there are mainly two classes of risks; generic risks that are common to all projects, and project specific risks. In many cases, some of these hazards are easy to recognize and regulate or accomplish. However, in some cases, other risks are less obvious and thus very difficult to make predictions on their likelihood to occur and the impact they may cause at that time (Levine 2004, p. 32). The complication and difficulty in predictions comes because of numerous project proportions; structure, size, complexity, composition, novelty, long planning, and execution horizons. All these have a common influence on the modest of the scheme at the end; hus, any indeterminate discrepancy in this has fiscal implications. Therefore, risk management in information technology, especially software