Market Structure and Market Failures in Sri Lankan Tobacco Industry

Recently, cigarettes have been getting a bad rap. No one seems to understand that the real problem at hand is not the negative effects of smoking cigarettes, but those who abstain from smoking cigarettes. These people are nothing but a nuisance, a lousy bunch of no-gooders that just want to ruin your fun. In fact, smoking cigarettes is an activity that the entire population can benefit from. The world relies on the production and consumption of tobacco, and there are many positives of smoking that outweigh the negatives. For example, smokers dedicate a large portion of their life buying packs upon packs of cigarettes, which in turn gives a huge profit to the country. Surely if you consider yourself a

market, in response of falling market prices of tobacco due to the oversaturated tobacco market, famers

For both the pro and con sides these facts are presented in order to support each paper's opinions. One opinion of the pro side is that the market of cigarettes is a market for disease and death. At one point the paper states, "Outrage at an industry that has made billions selling sickness and death" the paper enforces this opinion later by saying, "For decades, Big Tobacco has made a profit by selling the instruments of disease and death." Another opinion is that tobacco industries are the only companies that manufacture a product which causes serious illness and kills. The pro side quotes Edward L. Kaven, author of Smoking: The Story Behind the Maze as saying, "the only industry which produces a consumer product that is likely to kill and render human beings seriously ill when used as intended." I believe that these opinions are exaggerated ones. First of all, the tobacco companies are not the only companies that sell a product that is unhealthy and even has devastating affects on people.

History has proven that government penalties, in the form of taxes, deter smoking. The 2000 U.S. Surgeon General’s Report, Reducing Tobacco Use, found that raising tobacco-product prices decreases the prevalence of tobacco use, and tobacco tax increases produce significant long-term improvements in health. From its review of existing research, the report concluded that raising tobacco taxes is one of the most effective tobacco prevention and control strategies (7). Along with price increases, mass-media campaigns and smoking bans have made cigarette smoking pretty much unacceptable in today’s society. “Today, approximately 22 percent of adults age twenty-two and older are smokers, compared with 33 percent in 1979” (Thorpe 1440). It is clear, from these examples, the use of penalties to deter the unhealthy behavior of smoking is a successful intervention.

Tobacco smoking causes the majority of mortality worldwide. “In the USA alone, tobacco smoking causes 440,000 deaths annually” (Stack). Tobacco smokers prematurely die from lung disease, heart disease and cancer. The risk of tobacco smoking can significantly be reduced by smoking cessation, currently there are many alternatives for tobacco cessation. As Nicole Stack points out; the most common pharmacotherapy that comes in different formats is the nicotine replacement therapy (NRT). “Current pharmacotherapies include nicotine replacement therapy (NRT) in the form of gum, transdermal patch, sublingual tablet, nasal spray, and vapor inhaler formulations” (Stack). There are currently two non nicotine alternatives, Zyban and Chantix. Chantix

In the article ‘Cigarette tax hike sparks panic buying’, Hall (2010) discusses the effects of tax increase on cigarettes. The government has decided to raise the tax on cigarettes by 25%, costing $2.16 more on a pack of 30 cigarettes. This government intervention is an attempt to stop people from smoking and reduce the health bill caused by those who smoke. The increase in tax is expected to save $5 billion more of the people’s tax dollars and the government decided that it will be put into a better use for its health and hospitals reparations. This contractionary fiscal policy is expected to reduce the total tobacco consumption by approximately six percent and drive down the number of smokers by 87,000.

Tobacco is one of the world's dangerous drug which is haunting human lives to death. Over a billion adults are addicted to this drug and wasting their money, time and health. Nowadays there has been an ongoing debate/discussion among many people about the role of government in restricting the usage of Tobacco and thereby safeguarding the health of the public. In my personal opinion, both government and the Individual together needs to work to overcome this problem.

Smoking is an expensive habit. People who smoke cigarettes can spend as much as $2,500 a year on them. Smokers’ claim that it helps relax them and it releases stress but the negative aspects of smoking outweigh the positive. Smoking is a health hazard for smokers and non-smokers. Smokers should have the right to choose what to do with their own health but they should respect non-smokers. Many people believe that there are good and bad outcomes from smoking. I believe that smoking is bad and that it should be banned.

Every year in the United States every ⅕ deaths is due to the smoking of cigarettes. The smoking epidemic has ensued many negative effects to their users, people around users, and the environment. The environment is also being negatively affected because “.69 billion pounds of butts end up as toxic trash each year, making cigarettes the most littered item on Earth” and littering is know to be terrible for the environment. The government has not intervened in illegalizing cigarette usage, so people must make it their responsibility to not start or, if they have already started, to stop. The smoking of cigarettes is a very addictive habit to have and there it makes it hard to discontinue, but nevertheless this should only motivate people to take

The use of tobacco is a very controversial topic here in the United States. The harmful side effects of tobacco are well known and consequently, many believe that it should be outlawed. Though this has not yet occurred, constant regulations on the industry and

would like to discuss replacement therapy for tobacco, and the helpful ways of quitting, there are different ways to quit smoking and kicking that nasty habit, to increase your life term. According to the CDC Tobacco use can lead to tobacco/nicotine dependence and serious health problems. Quitting smoking greatly reduces the risk of developing smoking-related diseases and early death. It can lead to lung cancer and many other types of cancer and risk for heart disease, stroke, and peripheral vascular disease (narrowing of the blood vessels outside your heart). (, 2015) There have been different types of therapy to reduce the use of nicotine and tobacco use. Such as medications that’s been approved by your PCP, nicotine patches, and Hypnosis.

Competitive rivalry exists between companies with the same or similar products/services and similar markets. Factors to be considered include:

However our concern here is not only about the cigarette as a product but with the ethics of cigarettes as well, that affect the social process of marketing. This is because marketing process makes things worse and is also considered as unethical, and as a result has a significant negative impact on the societal welfare. Multinational tobacco companies apply sophisticated strategies ( such as putting flavor in the cigarettes and placing cigarettes in the shops near the sweets to make them more appealing) and invest huge amounts of money for marketing, in order to establish brand familiarity and future loyalty among young peoplem, to secure profits in the long run. 'The tobacco epidemic is a man-made international health crisis, created and sustained by multinational tobacco corporations.' (Yach, Brinchmann, Bellet page 2).

(Internal Summary/Transition: Smoking can not only ruin your health, but also cause economic destruction. We will examine the impact of smoking on the economy.)

Again, with high entry barriers they are not bombarded with other firms coming and going from their market. (Samuelson and Marks, 2010).