Friday, April 25, 2008

Unit 2: Market dominance: Collusion in the cigarette market?

This BBC video and associated report (and a guardian article)say that the Office of Fair Trading has alleged tobacco firms and supermarkets have been engaged in unlawful practices linked to retail prices for tobacco.

http://news.bbc.co.uk/1/hi/business/7367168.stm

http://news.bbc.co.uk/1/hi/business/7366348.stm

http://www.guardian.co.uk/business/2008/apr/25/tobaccoindustry.regulators

a) How does the market fail?
b) What sort of efficiency will not be achieved if the allegations are proved to be true?
c) What actions could the OFT take if the allegations are proven?

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