The ‘Radar’ Corporation

Two  years ago; I read in in one of the local newspapers that Dubai Police wants to install additional speed cameras “radars” to the already too many existing ones. The project is to be planned so that the distance traveled between radar and the other does not exceed 1 kilometer against the current 4 kilometers. Back then, I argued how having hidden radars with ambiguous speed limits defeat the purpose of increasing awareness in the society. And recently, many applications and people specialized in exposing the locations and speed limits of those which makes hiding them pointless. So even though the project is part of a campaign that aims at having safe roads with zero fatalities by 2020; it is quite interesting that they make millions of Dirhams in revenues every year only to buy more advanced radars. This is because penalties are so severe in cash amounts but not in punishment applied. In Poland, for example; they send your car back to you in a one meter cubic form if you exceed speed limit by 60 km/hr.

For the sake of the analysis, the assumption will be that the radar is our product here with a normal economic life cycle. Such a cycle wouldn’t be steep or flat, but with values mildly and normally distributed on both ends. The curve will be inclining, constant, and then declining. An economic life cycle of a product consists of three stages. The first stage of our economic life cycle curve is when revenues go up as the number of radars does. The second and middle stage is the constant one, which is not quite constant. It only means that the return per radar added is diminishing. To illustrate, if new radar would make 10000 a month, it would now make no more than 7000 now or so. The third stage of the curve is the decreasing return one. That is, with every radar added; the total revenue from old and news radars decrease, and not only the return per radar. A reasonable assumption might be that we are in the constant stage as the authorities are still considering an increase in the number of radars.

Besides the above analysis, there is the human behavior factor which is the social recognition effect. In other words, people are becoming more alert and careful while driving even if this is because they have paid a lot already. It shall consequently result in a decrease in radar revenues to a certain extent as people memorized the locations of those fixed and of even some that are mobile through the above mentioned ways. Consequently, they want to increase the number of radars to move back up the cycle, but it wouldn’t work. Radar every 1 kilometer would reduce human error in missing those that were previously memorized and so the total return would decrease, decreasing return per old and per new radar.  Besides, another cause of a decline in revenues can be a decrease in the number of cars driven in Dubai as a result of people leaving. However, and for the sake of the above argument; let’s assume that the effect of the latter is offset by an equal number of new driving licenses issued daily.

To conclude, the idea of increasing radars must be exciting if we lived in a simple world with no life cycle that goes upwards and downwards. And for a project like this to be beneficial, both in monetary terms and in saving lives; there got to be more to be done than just amplifying the number of radars and hiding mobile ones. In S. Korea, there is a warning flash before the actual one penalizes you. But when driving here, make sure you are always dressed up and that you are always smiling as you never know where the paparazzi are. If given a second thought, there must be other ways to increase awareness in order to achieve the 2020 targets as many innovative ones are being used elsewhere. Those, for sure, do not include a constant increase in the amount of fine paid as the travel speed above speed limit increases neither do they include paying a daily rate for car impound. I am wondering if this, unintentionally of course, would turn into a money-making corporation. If so, is there going to be an IPO? I would definitely want to invest!