Hybrid Paper
Part One
A market failure is a condition in which the free markets are unsuccessful with the efficient allocation of resources. Market failure has developed into an increasingly significant concern for economists. There is an apparent instance for government involvement in the market places where some kind of market failure occurs. The government can validate this through proclamations of intervening in the interest of the public. Fundamentally, a market failure occurs when the marketplace does not make the economy realize efficiency.
Monopoly power
A pure economy is described as a solitary supplier. Whereas there are only a few instances of pure monopoly, the power of monopoly is much further widespread and can subsist even where there is an additional supplier. For the rationale of controlling mergers, regulators consider two firms combining to form a market share of approximately 25 percent or more in a specific market to be prohibited.
The formations of monopolies are under certain circumstances. Such include conditions such as when:
A firm has restricted ownership or usage of a resource that is scarce.
The government grants a firm monopoly standing.
Firms have copyright or patents providing them with exceptional rights of selling a product or protecting the intellectual property.
Firms merger in order to have dominant positions in the market
Maintaining of monopoly power can be up held through barriers to entry such as:
• If the production costs decrease as the scale of the business rises and the production of output happens to be in a large volume, the present firma will be superior with a cost advantage over prospective competitors as this deters fresh competitors.
• Predatory pricing involves dropping prices extremely low as an illustration of authority. This is meant to exert pressure on the potential or existing competitors.
• On the other hand, limit pricing involves setting up of a price that is underneath the average cost of fresh competitors. If the fresh competitors match the price, they will generate losses.
• The firms that are early competitors in a market may attach the existing scarce resources thereby making it hard for the fresh competitors to exploit these resources.
• Setting up the costs extremely high makes it difficult for the fresh competitors.
• Having the sunk costs (such as the costs of advertising that cannot be recovered from a firm that has gone out of business) higher, increases the barrier for the fresh entrants.
• Heavy costs on advertising by the existent firms can prevent entry since for an effective competition to happen the entry firms will attempt to fit the expenses of the serving firm.
• Loyalty to brands and loyalty schemes by the consumer result in fresh entrants finding it difficult to win the share of the market.
• Exclusive contracts such as contracts between retailers and suppliers can keep out additional retailers from joining the market.
• Vertical incorporation such as a brewer owning a chain of taverns makes it further difficult for fresh brewers to join the market as there are fewer taverns to trade with the beers.
The costs of monopoly include such elements as:
The consumers will have fewer choices if supply is managed by a monopolist.
Monopolies can take advantage of their position and thereby charge superior prices since the consumers have no choice.
Monopolists can further limit output onto the market to exploit so as to explore their dominant positions over time or to propel price.
An increase in price or output that is lower would result in the consumer surplus loss.
Additional elements include asymmetric information, inefficiency in production, inefficiency in allocation and net welfare loss.
Part Two
Business Systems
Business procedures are dynamic in characteristic and involve actions. Nevertheless, when scrutinizing the whole business, it is necessary to reflect on the static aspects. For example, this involves organizational arrangement within which the processes of business are conducted. This additionally involves various business information objects such as orders or tickets. For the dynamic and static aspects as entirety, business system term is applied. In a business technology, a business system is value additional chain that defines the value additional process thus implying the supply of services and goods. A business has the capability of spanning one or numerous business systems. All the business systems generate economic benefit. Consequently, business administrative implication of business system does not vary exceedingly much from the usage of the business system term.
For the modeling and analysis of a business system, it is imperative to describe the limits of the system. A business system, which is to be modeled, can span the whole organization. It is probable to consider and sculpt only a selected segment of an organization. For instance, focus can be on the integration of an IT system into the operations of a passenger service. Consequently, it is satisfactory to observe the operation and narrow the business system to the passenger services solitarily. Frequently, a person is warned regarding the complexity of business process modeling and analysis. There exist additional hurdles to surmount if business procedures are managed by an IT system.
Nevertheless, the existing reference models of business procedure existing can speed up and simplify the process of modeling. Comparison of processes with identical processes in the other organizations can be of assistance when making out discrepancies and deriving possibilities for enhancement.
Works Cited
Magal, Simha, and Jeffrey Word. Essentials of Business Processes and Information Systems. Hoboken, NJ: Wiley/SAP, 2009. Print.
Mankiw, Nicholas G. Principles of Economics. Mason, Ohio: Thomson South-Western, 2011. Print.
