Why the Eastern Tobacco Company in Egypt is an illustration of monopolistic competition?
Eastern Tobacco Company is known as the largest baccy manufacturer in Egypt. The company produces different merchandises such as coffin nails. molasses baccy. pipe baccy and cigars ( Oxford Business Group. 2008 ) . Additionally. it produces other merchandises that are related to coffin nails. These may include homogenised and filter rods baccy ( Owen & A ; Pamuk. 1998 ) . Their full merchandises are divided into two classs. These may include local and export merchandises. The company is known as the largest company bring forthing big sum of baccy in Egypt Thus. it faces stiff competition by local and international companies that produces baccy.
Eastern Tobacco Company is an illustration of monopolistic competition ( Owen & A ; Pamuk. 1998 ) . This is due to the fact that all baccy industry is categorized in monopolistic competition. One of the feasible grounds that make Eastern Tobacco Company to be categorized in monopolistic competition is the fact that there are rather a big figure of companies that are bring forthing the same merchandises ; nevertheless. they have differentiated them. This means that all companies under baccy sector are fulfilling the market demand for baccy ( Solow. 1999 ) .
Another ground that makes Eastern Tobacco Company to be a good illustration of monopolistic competition is the fact that it brings out differentiated merchandises that are moderately close replacements for each other ( Oxford Business Group. 2008 ) . For case. the company brings into the market different types of coffin nails. These may include homogenised and filter rods coffin nails. It besides produces different types of baccy. for case. molasses baccy. pipe baccy.
Therefore. the company has one of the features of houses that are categorized in the group of monopolistic competition. Due to the fact that merchandises are of close replacements. there can be any decrease of monetary value. This can be seen in Eastern Tobacco Company as they can be in a place to cut down the monetary value of their merchandises ( Owen & A ; Pamuk. 1998 ) . This helps them to pull big figure of clients and therefore. they are perceived as the largest company in Egypt bring forthing baccy.
One of the major features of monopolistic competition is the fact that there are a big figure of Sellerss ( Solow. 1999 ) . They tend to sell differentiated merchandises. This can be evidenced in baccy industry. as there is quite figure of Sellerss that sell different types of baccy. For case. many local companies are selling same merchandises as Eastern Tobacco Company. Therefore. there is a different marketer that sells baccy like Eastern Tobacco Company. This means that Eastern Tobacco Company have achieved this features of monopolistic competition where many Sellerss selling differentiated merchandises dominate the industry.
Eastern Tobacco Company does non hold monetary value competition. This is due to the fact that the company has the freedom to win over its full clients. For case. big figure of clients prefers Eastern Tobacco Company as they offer after gross revenues services. This is a state of affairs where a purchaser purchases big metric tons of baccy and the company offers to take them to his or her place. Offer after gross revenues services is one manner that Eastern Tobacco Company uses to pull big figure of clients.
From the above point of position. it is clearly evidenced that Eastern Tobacco Company has all features that monopolistic competition is associated with. Therefore. it can be classified as a good illustration of monopolistic competition. For case. the company has similar merchandises but has differentiated them to different trade names. These may include molasses baccy. pipe baccy ( Oxford Business Group. 2008 ) . Therefore. it is an illustration of monopolistic competition.
Owen. E. R. J. . & A ; Pamuk. S. ( 1998 ) .A history of Middle East economic systems in the 20th century. London: I. B. Tauris Publishers.
Oxford Business Group. ( 2008 ) .The Report: Emerging Egypt 2008. London: Oxford Business Group.
Solow. R. M. ( 1999 ) .Monopolistic competition and macroeconomic theory. Cambridge [ u. a. : Cambridge Univ. Press.