Essay Tobacco and Tobacco Market Results

Submitted By jdeleon823
Words: 659
Pages: 3

The U.S. government regulates the sale and distribution of tobacco products in many ways. Some examples of the way the government regulates are setting an age limit and taxing tobacco products. In the economic world, the tobacco wars are a serious issue. The sale of tobacco as we know is very inelastic.

The government puts heavy taxes on tobacco products to cut down on the sale of them. They know that the people will buy cigarettes no matter how much they cost. Elasticity has a lot to do with the taxation of cigarettes. The relatively low price elasticity of demand in the tobacco market results in higher tax revenues than in any other type of market. The government knows that the demand of tobacco is high enough that they can apply these stiff taxes. Cigarette taxes work as a steady source of revenue for the government. There will be some people that will stop smoking, but there will always be those people that will not. The demand will always still be there unlike other market products.

Another reason why the government wants to regulate the sale of tobacco products is to cut down on the number of underage smokers. All throughout the United States you must be eighteen years of age to buy a pack of cigarettes or any other tobacco product. The government does not want the youth to start smoking at an early age because of the higher risks of cancer and other smoking related problems. They know how addictive tobacco is and how hard it is to kick the habit once you have started. There have been many studies showing that people who smoke cigarettes are more likely to die from such diseases as cancer, emphysema, and asthma. On every single pack of cigarettes there is always a Surgeon General’s warning on it. This warning is used to let society know that there are consequences to smoking.

Anti-trust regulations also have a great deal to do with the sale of tobacco. Tobacco companies tend to practice oligopolization. Oligopoly describes a market with only few producers and its entry into the market is relatively difficult. Government wants to control these private powers. Cigarette companies all work together to set their prices. If one company lowers or raises their prices the other companies will take notice of this and follow the other lead. From the early twentieth century tobacco companies have always had to deal with all types of anti-trust regulations. The laws are based on the principle of conserving and encouraging a free and…