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Economic - Coursework Example

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Primarily they concentrate on the production of cigarettes however they also produce cigarillos, roll your own or pipe tobacco and smokeless snus. The production of tobacco results in a lot of unintended outcomes of production also known as externalities. A lot of these resulting externalities are negative. According to N. Gregory Mankiw- A, a negative externality is an action of a product on consumers due to which negative side effects on a third party result. British American Tobacco produces several negative externalities. Some of these are significant damage to the environment, reduction in economic productivity, pollution, a contribution to world hunger and a exorbitant health care costs that society and not the tobacco industry pays as a result of their products (Babere K. C.) Tobacco leafs that are plucked at tobacco farms, that British American Tobacco owns throughout the world, basically constitutes to the first step in the production process. A huge amount of manual labor is required for this process. Tobacco farms in Milawi, where British American Tobacco dominates the market alone has over 78,000 laborers most of which are children. This constitutes to a negative externality for BAT in terms of child labor. As an effect of handling this tobacco leafs these children, according to The Learning Economist, suffer from symptoms of green tobacco sickness or nicotine poisoning. Deforestation resulting from clearing space for tobacco plantations is another negative externality. Also water used in growing the tobacco has a high level of pesticide applied to it which affects water supplies adversely contributing to a adverse environment implication. Tobacco is stored in giant silos after it is cut before starting the process of manufacturing. These silos occupy a large amount of space. This in terms results in a negative externality as they replace prime land from food production and hence contributing to world hunger. John Madley notes that tobaccos minor use of land in Hong Kong alone control denies 10 to 12 million people of food leaving the government to bear the cost of food imports. When processed tobacco lea arrives at factories it is blended with other ingredients such as flavorings or expanded tobacco. The blended tobacco is treated with the right amount of steam and water to make it supple before it can be cut into cigarettes (Fondez, Web). Although much of the cigarette making is now undertaken by machines as plants are heading towards being more automated however if laborers are over exposed to this part of the production process it can result in symptoms such as severe headaches, abdominal pain, coughing and breathlessness contributing to additional health care costs. The excess use of machinery also leads to the negative externality in shape of excessive electricity used for the purpose of running the manufacturing silos. Once produced these packing machines wrap these cigarettes after which they are moved to a holding silo’s before being shipped off to the distribution channels. Wood in shape of paper is also a natural resource which is depleted due to the cigarette manufacturing process with one unit requiring 4 miles of paper being consumed in an hour for rolling and packaging cigarettes. Furthermore the chemical wastes dumped into the soil which damages the fertility levels of the dumping area (Ygoy, Web). According to N. G. Mankiw-B, the government’s primary response to externalities can be categorized into two ways; the first of these aims to ...Show more


British American Tobacco British American Tobacco was ‘born’ international over 100 years ago and is one of the world’s most international tobacco group. They have 50 cigarette factories in over 41 countries and their subsidiaries produce around 724 billion cigarettes…
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Economic essay example
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