Monopoly in Elankai

491 Words2 Pages
In an effort to solve consumer conflicts on active businesses and companies around the world, Mr.Simeone, the Economics Authority has requested a report on a misinterpreted Monopoly. I have identified many monopolies through my profession as an economic detective, my recent finding was the CTC, Ceylon Tobacco Company located in Colombo, Sri Lanka. Through my research, I learned the CTC dominates the tobacco market, is a price maker, created barriers to enter and leave the industry, and has no competitors. I also observed the publics’ many misconceptions of the company. Overall, the answers to my investigation state that the Ceylon Tobacco Company is a monopoly. First of all, the CTC plays a dominant role in the tobacco industry in Sri Lanka. CTC is ideally a holding of the BAT, British American Tobacco Company since the 1950s. The BAT chose Sri Lanka to be one of the richest countries in soil to grow, harvest, process and manufacture its products. In return, Sri Lanka accepted the BAT request for its strong international reputation for more than 200 high quality brands which meet consumers’ diverse preferences. Till now, CTC Is Sri Lanka’s only legal cigarette manufacturer. According to research, CTC has 96% control over supply in the total market while remaining 4% of tobacco supply is used to make illicit handmade tobacco products. Finished products are distributed to retail outlets such as supermarkets, convenience stores, hotels and restaurants throughout Sri Lanka by 41 distributors. Some economists consider this form of monopoly to be somewhat of a government granted monopoly because the government grants privileges to BAT to be a sole provider of commodity, restricting potential competitors into the market. This monopoly is a price maker. Appropriate product prices are suggested by the BAT, while prices are fixed by CTC so they are above marginal costs.

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