Lawrence of Sweden
10-26-2009, 06:10 AM
"Almost"? ? ? Cecil are you casting doubt on the sacred god of Free Enterprise?
I think that someone could call you a socialist,,,
Lawrence of Sweden
10-26-2009, 09:01 AM
Welcome to the SDMB, Lawrence. We usually link to the article we are talking about in this forum, so I will provide it for you here. (http://www.straightdope.com/columns/read/179/why-do-all-brands-of-cigarettes-cost-the-same)
I think that he was more commenting about the implications of the success of the tobacco industry.
10-28-2009, 02:04 PM
Cecil's explanation is more-or-less conscious parallelism, and I guess he's right as far as he goes, but it's not the whole story. As explained in one paper (a summary and link are at http://tobaccocontrol.bmj.com/cgi/content/abstract/14/2/80), about half of the states set the minimum prices that can be charged for cigarettes. I'm not sure whether to be proud or embarrassed that my home state of New York's seems to be the most stringent in this regard; the anti-tobacco person in me is the former, the free-marketer (not to mention my default position regarding anything our legislature does) is the latter. If you're interested in how NY controls this, see http://www.nystax.gov/pdf/publications/cigarette/pub509.pdf.
11-01-2009, 07:33 PM
I've got another take on the situation (same article):
The base cost of a pack of cigarettes have been hovering at about the same price, $1, for the past 10-20 years. However, different companies do charge different amounts, a variance of say 10-20%.
However, any given state charges the same amount of tax per pack on cigarettes from all companies. Currently, in my state, assuming the $1/pack is still true, this is around $7.
Therefore, if Brand X is charging 90 cents, while Brand Y is charging $1.10, that would be a huge 22% difference. However, that 20 cents, after tax, only represents a 2.5% difference after taking into account the $7 tax ($7.90 vs $8.10.) To the average consumer, this would seem like the price is identical, but in reality, the prices vary by a lot.
The next time you take an international flight, check in at the Duty Free store and then you can really see the huge difference in prices among different manufacturers, and the prices generally run along the same lines as air conditioners (size, gimmicks, purity, tobacco quality, extras, filter quality, etc. etc. etc.) The last time I checked (~2003 or so,) the "real" price of cigarettes varied by as much as 100% (the cheapest, iirc, was $10/carton, the most expensive was $20/carton, including international brands, but American cigarettes fell into a narrow range.)
Therefore, I would have expected Cecil to answer with one of his patented "You sir, are an idiot + <funny insult>" comments rather than just assuming that the reader's assumption (all cigarettes have the same price) is correct.
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