Abstract

This thesis presents a microeconomic assessment of the marble industry in Egypt. It starts with an overview and analysis of the international marble industry, highlighting this industry as one of the oldest industries in the world. Historically, the industry moved from labor­intensive to capital-intensive with the advent of technological advancement, including development of automated production tools like cranes and diamond cutting wires. In Egypt, during the past 20 years, market entry into the industry was high, due to the high profit margins achieved. In addition, there was (and still is) lack of effective government regulation. Currently, the marble industry in Egypt could be described as that of monopolistic competition, where products are highly differentiated and there are relatively small barriers to entry. However, barriers to entry are becoming more tangible as the needed capital investment increased sharply with the devaluation of the Egyptian Pound. In order to study the dynamics of the industry more thoroughly, a case study (Watany Marble) was examined from two microeconomic perspectives: (1) an investment appraisal using economic cost-benefit analysis leading towards NPV, IRR, ERR and ROI calculations; and (2) application of the theory of the firm to the case study using Cobb Douglas production, profit maximization, cost minimization and returns to scale calculations. Results yield a ROI of 12.24% using weighted­average opportunity cost of capital considerations, a declining long-run average cost curve, and increasing returns to scale in production. Using isoquant-isocost analysis, the marginal rate of technical substitution between factors of production resulted in $ 1000 of capital corresponding to 7.5 units of labor. Future prospects for the industry is market segmentation, where value-driven and export-oriented firms will tend towards forming an oligopoly, whereas local-oriented, cost-driven firms with relatively low technology will tend towards operating under conditions of a monopolistic competition.

School

School of Business

Department

Economics Department

Degree Name

MA in Economics

Date of Award

6-1-2004

Online Submission Date

1-1-2004

First Advisor

Tarek Selim

Committee Member 1

Tarek Selim

Committee Member 2

Adel Beshai

Committee Member 3

Heba Thompson

Document Type

Thesis

Extent

152 leaves

Library of Congress Subject Heading 1

Marble industry and trade

Library of Congress Subject Heading 2

Industrial organization (Economic theory)

Rights

The American University in Cairo grants authors of theses and dissertations a maximum embargo period of two years from the date of submission, upon request. After the embargo elapses, these documents are made available publicly. If you are the author of this thesis or dissertation, and would like to request an exceptional extension of the embargo period, please write to thesisadmin@aucegypt.edu

Call Number

Thesis 2004/41

Location

mmbk

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Included in

Economics Commons

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