Prof. Barry Kotlove
7 June 2014
Current Microeconomic Events
Tobbaco Companies in Indonesia
Tobacco industries are categorized as oligopolies. Oligopoly, according to McConnell Brue Flyyn’s textbook, is “characterized by multiple firms, one or more of which will produce a significant portion of industry output.” Tobacco had been present in Indonesia since the 1600s. It was brought in to Java Island by Portuguese merchants. At first, Indonesia’s cigarettes were handmade at home. They were rolled and wrapped with cornhusks, but that was a long time ago. The Indonesian tobacco industry today is characterized by the dominance of big three tobacco companies---Gudang Garam, Bentoel, and Sampoerna. These …show more content…
It is estimated that the beer sale in Africa will continue growing about 4.6% per year. As consumers in North America and Western Europe have started to pay attention to their health and therefore slowly decreasing the rate of drinking, African has started to be blinded by beers. With each African consumer consumes beer about three time’s global average, and low taxation, these clearly attracts beer producer around the world such as North American and European companies. Surely the barrier to entry is not easy to overcome as SABMiller and Diageo have successfully made the market hard to compete and make other parties hesitate to come in.
The beer demand in Africa is almost a perfect elastic demand.