Course Name: Microeconomics

Course Code: ALD1204

Term paper on “Role of Tobacco in Shaping Microeconomic Dynamics”
Submitted To:
Ummay Mahima Ima
Assistant Professor
Department of Business Administration in Finance & Banking
Faculty of Business Studies (FBS)
Submitted By:
Group: 09- Chokers

Name ID
Bishal Singha 18221072
Sadman Sakib Rohan 23221508076
Israt Jahan Oyshe 24221509102
Nafis Al Shahadat 24221509118
Arman Khan Bijoy 24221509140
Kazi Shahriar Kamal 24221509166

Section: B
Batch: 2024
Date of submission: 18 January, 2024
LETTER OF TRANSMITTAL

18 January, 2025

Ummay Mahima Ima

Lecturer,

Bangladesh University of professionals

Subject: Submission of term paper titled “Role of Tobacco in Shaping Microeconomic Dynamics”

Dear Ma’am,

With due respect, we are reporting to you the term paper you assigned us on the topic ‘Role of
Tobacco in Shaping Microeconomic Dynamics’ for the course ‘Microeconomics (ALD-1204). We
have tried our best to do the research properly, considering every trifling thing you advised, and
make the report in a proper format.

We, therefore, eagerly believe that this term paper report will meet your specifications and
contentment.

Sincerely Yours,

Group – 09

1. Bishal Singha ......................... 3. Sadman Sakib Rohan ........................

1. Israt Jahan Oyshe ......................... 2. Nafis Al Shahadat ............................

3. Arman khan Bijoy ......................... 4. Kazi Shahriar Kamal ........................

Acknowledgement

First of all, we would like to thank the almighty Allah, for whose kindness we have managed to
successfully complete the term paper report properly and thoroughly with sound health.

Then, we would like to give the credit to our course teacher, Ummay Mahima Ima. Without her
valuable guidance, cordial direction, and absolute support, it would be tough for us to complete
the term paper report in a proper way on time. We are also thanking her for assigning us the topic.
This ensured our dexterity enough regarding this area that in a real case scenario, we know how
the whole system operates.

Finally, we would like to thank our team members. Without their help, it would be tough to
organize the report with necessary information and research related to it.

ii
Executive Summary
This study explores the role of tobacco in shaping the microeconomic dynamics of
Bangladesh .The tobacco sector plays an important role in the economy of the country. It provides
livelihood opportunities for people especially in rural areas of the country. It serves as an important
source of revenue through taxation for the governments. The economic benefit of public transport
is significant but comes at the cost of public health, social equity and the environment.The study
explores important factors of microeconomics like demand and supply, price elasticity, market
structure, and costs of production to understand the industry. Because tobacco is addictive the
demand for tobacco is price inelastic. We may reasonably conclude this is the case, since despite
higher prices consumers carry on consuming it. There are two sides of the market, one the large
firms in the formal sector and other informal sector in bidi production which depend on insecure,
and often exploited workers. To tackle these issues, the research indicates changes in taxation
policies to be mandatory. Furthermore, an increase in the enforcement of anti-tobacco regulation
will do the needful. Similarly, livelihoods of farmers and workers depending on tobacco need to
be diversified .The way people consume goods and other factors change with public awareness
campaigns with low environmental impact agriculture practices. The evidence shows we need a
smarter and a multi-pronged approach to lessen the economy’s dependence on tobacco while
supporting sustainable development and equity.

To conclude, the tobacco industry in Bangladesh has become an economically significant industry
and also a health and environmental hazard. Though its current role in the economy must not be
undermined, the country must bring about a change towards cleaner alternatives for sustainable
growth. This study will serve as a basis for policymakers to formulate policies concerning the
industry with people who are involved in the industry.

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Table of Content

Chapter 1: Introduction 1

1.1 Background: Tobacco in Bangladesh 1

1.2 Objective 2

1.3 Methodology 2

1.4 Limitations 3

Chapter 2 : Microeconomics Factors 3

Chapter 3 : Introduction of the selected good 5

Chapter 4: Impact of the Selected Good on Microeconomic Factors 7

Demand 7

Income Effect 8

Substitution Effect 9

Supply 9

Input Price 11

Effect of Government Regulations 12

Price of Tobacco Products 14

Price Elasticity 14

Changes in Consumer Spending Patterns 16

Income Distribution and Equity 16

Market Dynamics and Employment 17

Government Policy 17

Chapter 5: Challenges 18

Recommendation 20

Conclusion 22

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Chapter 1: Introduction

1.1 Background: Tobacco in Bangladesh

Bangladesh’s agricultural and industrial sectors have historically relied heavily on tobacco, which
has had a profound impact on the country’s socioeconomic and microeconomic dynamics.
Tobacco can be grown in the fertile areas of northern Bangladesh, especially in Rangpur, Kushtia,
and Bandarban. With an average yield of 1.5 to 2 metric tons per hectare, tobacco is more profitable
than more conventional crops like rice and jute, and more than 120,000 hectares of fertile land are
planted to it each year. More than 100,000 farmers depend on this output for their livelihoods,
while downstream sectors including manufacturing, processing, and retail indirectly employ 1.2
million people nationwide.

The tobacco industry's economic impact goes beyond job creation. With 10% of all national tax
revenue coming from it, it makes a significant contribution to government coffers. Cigarette excise
taxes accounted for the greatest portion of the government’s tobacco product taxes, which brought
in about BDT 28,000 crore in the fiscal year 2021–2022. Tobacco is a significant contributor to
public finances in Bangladesh due to its tiered tax structure, which imposes one of the highest
excise rates in the region on cigarettes, ranging from 55% to 75%. Together with regional
producers, multinational firms like British American Tobacco Bangladesh control the market,
guaranteeing a steady stream of income and jobs.

Notwithstanding these financial benefits, tobacco’s negative effects cannot be disregarded. With
35% of adults in Bangladesh consuming tobacco products—46% of men and 28% of women—
tobacco usage is still a major public health concern. An estimated BDT 30,000 crore is spent on
health care each year as a result of the widespread usage of smokeless and smoking tobacco.
Cancer, respiratory disorders, cardiovascular diseases, and other tobacco-related illnesses put a
significant strain on the healthcare system and lower worker productivity.

Tobacco farming’s negative effects on the environment make matters worse. Because wood is
frequently used to cure tobacco leaves, tobacco growing accounts for 3% of the country’s
deforestation. Furthermore, the crop uses a lot of pesticides and rapidly depletes soil nutrients,
which contributes to soil infertility and environmental deterioration in important farming areas.
The complexity of tobacco's position in Bangladesh is encapsulated in this dichotomy: tobacco as
an economic advantage vs a liability to public health and the environment. Despite the industry’s
substantial income and job prospects, the social and environmental consequences highlight the
need for sustainable and well-balanced regulatory responses.

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1.2 Objective

This study aims to investigate how tobacco has influenced Bangladesh’s microeconomic
environment. It seeks to address the obstacles the tobacco industry presents to sustainable
development while examining the complex relationships it has with other economic variables.

The objectives of this study include:

1. Supply and Demand Dynamics: Examining how supply networks adjust to fulfill the high
demand for tobacco products in spite of known health hazards, as well as the variables that
contribute to this demand.
2. Revenue Trends: Evaluating the trade-offs between economic benefits and related societal
costs, as well as the amount of money the government receives from tobacco taxes.
3. Pricing Strategies: Recognizing how consumer behavior, market competition, and taxes
affect how affordable tobacco products are in Bangladesh.
4. Economic and Social Challenges: Assessing tobacco’s hidden costs, such as its effects on
environmental deterioration, public health, and the lives of people who depend on tobacco
growing and other sectors.

The economic processes behind the tobacco industry and their wider ramifications for
Bangladesh’s development are thoroughly understood thanks to this study.

1.3 Methodology

This report is created based on secondary data analysis. The information was gathered from news
articles, government reports, market trends, and academic studies to investigate the
microeconomic impact of tobacco in Bangladesh. Data sourced from organizations such as the
Bangladesh Tobacco Control Cell and the National Board of Revenue provided key insights into
tobacco production, tax revenue, and consumption trends. Additional perspectives on pricing,
demand, supply, and market structure were obtained from market trends and industry reports.
Academic research added further depth by elucidating concepts like demand elasticity, market
equilibrium, and the opportunity costs linked to tobacco farming. To analyze the data, demand-
supply curves, price elasticity graphs, and indifference curves were employed to visualize market
behavior and consumer trends. Despite the availability of extensive secondary data, challenges
such as the lack of information from the informal sector and underreporting of health-related costs
introduced some gaps in the analysis. Nevertheless, the research offers a comprehensive
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understanding of tobacco's economic influence in Bangladesh, providing valuable insights to shape
future policy and discussions.

1.4 Limitations

Although this study has a wide range, it is limited by various factors:

Data Gaps: The informal segments of the tobacco industry frequently remain unregistered,
leading to difficulties in acquiring thorough data.

Complex Variables: Isolating the effect of tobacco from other macroeconomic influences, like
global market trends or evolving consumer behaviors, is challenging.

Healthcare Costs Monitoring: Although the projected healthcare expenses from tobacco-linked
diseases surpass BDT 30,000 crore each year, precise figures on indirect economic losses are still
lacking.

Nonetheless, these constraints emphasize the necessity for additional studies to address these gaps
and offer timely insights.

Chapter 2 : Microeconomics Factors

Microeconomic factors refer to the specific elements or variables that affect the actions, decisions,
and performance of people, households, and businesses within an economy. These factors focus
on resource allocation, pricing of goods and services, and interactions within markets. Analyzing
these factors is crucial for understanding market dynamics and forecasting economic outcomes.

Key Microeconomic Factors:

Demand and Supply

Demand: The quantity of goods and services that consumers are willing and able to purchase
Supply: The quantity producers are willing and able to supply at different prices.

The interaction of demand and supply influences the price levels and the quantities of goods
exchanged in a market. Shifts in these curves can be caused by changes in income, preferences,
production costs, and technology.

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Elasticity

The measure of how much the quantity demanded or supplied of a good changes in response to a
change in price, income, or other factors. For example, price elasticity of demand reflects how
responsive consumers are to price changes. Elasticity plays a crucial role in influencing revenue
and guiding pricing strategies.

Market Equilibrium

The state in which the quantity demanded equals the quantity supplied at a particular price level.
Equilibrium ensures there are no shortages or surpluses in the market, leading to stable pricing.

Consumer Behavior

Consumer behavior in the study of how individuals or households make decisions to allocate their
resources on consumption. It is shaped by factors such as income, preferences, tastes, and the
prices of goods and services. Understanding this behavior helps businesses in developing effective
pricing and marketing strategies.
Opportunity Cost

Opportunity cost is the value of the next best alternative that is sacrificed when a decision is made.
It reflects the potential benefits or returns that could have been achieved if resources had been
directed toward the alternative option.

Pricing Mechanism

The price of a good or service is determined through market interactions between demand and
supply. Prices are set based on the interaction of demand and supply, and they play a crucial role
in resource allocation and signaling to both consumers and producers.

Market Structure

Market structure refers to the way a market is organized based on the number of firms, the degree
of competition, and the differentiation of products. It covers from perfect competition to monopoly
and influences firm behavior, pricing strategies, and overall market efficiency.

Costs of Production

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The total expenses incurred by a business to produce goods or services. Fixed and variable costs
influence the pricing of products and the profitability of firms. Lower production costs can lead to
competitive pricing.

Chapter 3 : Introduction of the selected good

Tobacco is an important agricultural product of global significance. Further, it has impacted
economies and culture all over the world. Moreover, it also has a big impact on public health.
Tobacco is a plant grown worldwide that originated from the Americas. It is known as a cash crop
that is mostly grown in developing countries. Tobacco occupies a unique economic and social
position in Bangladesh. Millions of people depend on it as a means of livelihood which is also a
public health hazard. In this introduction, we will learn how important good tobacco is, particularly
in Bangladesh. There is a discussion on the economy, culture and markets.

Historical Background and Global Context

Growing and using tobacco has a long history. Widespread use began more than 500 years ago
and it is now one of the most traded goods. Tobacco, with industrialization, became a multi-billion
dollar industry and is used in the production of cigarettes, bidis, cigars, chewing, etc. Tobacco is
in high demand even though there are global restrictions on its use and campaigns against its use.

The Role of Tobacco in Bangladesh

Bangladesh ranks among the largest producers of tobacco in the world. In the country, the tobacco
crop is mainly cultivated in Rangpur, Kushtia and Chattogram Hill Tracts. Due to its favorable
climate, fertile soil and cheap labour, tobacco farming is a viable option for many farmers. Tobacco
industry refers to a variety of activities which includes growing process, bidi manufacturing,
cigarette manufacturing. It plays a crucial role in providing employment and revenue to the
government.

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Tobacco contributes to the tax revenues of the country. The government earns a significant amount
of revenue from excise duty and value-added tax (VAT) on tobacco. Further, raw tobacco is
exported which earns foreign exchange for the country. While tobacco farming brings a good
income for the farmers, it leads to food insecurity due to the diversion of land meant for food to
tobacco growing.

Cultural Significance

Tobacco use is deeply woven into Bangladeshi culture and tradition. People in rural areas use bidis
(small hand-rolled cigars) and smokeless tobacco products like zarda and gul since they are
affordable and easy to access. People often smoke with other people and they think smoking is a
status symbol. In the urban areas, the people consume cigarettes more often.

Market Dynamics and Challenges

Bangladesh has different types of tobacco market to meet the needs of various sectors of the
society. Urban and higher-income consumers like cigarettes while rural and lower-income
consumers prefer bidis and smokeless tobacco products. Although the industry adds economic
value, it is confronted by rising health awareness, stringent anti-tobacco laws and international
pressure to limit the production of tobacco.

To reduce tobacco use, the authorities imposed heavier taxes and restrictions on advertising on
tobacco products. But enforceability is weak & low-cost products such as bidis defeat the purpose.
The industry’s heavy reliance on child and low wage labour is leading to some serious call to
reforms.

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Chapter 4: Impact of the Selected Good on
Microeconomic Factors

Demand

The demand for tobacco products in Bangladesh is determined by price, culture and nicotine
addiction. Bidis are more common in the countryside because they are so cheap. Whereas
cigarettes are common in cities. Many types of people include zarda and gul among their daily
consumption. Limited awareness of health risks, lax enforcement of regulations, and the
availability of a wide range of tobacco products contribute to sustaining demand. Despite increased
taxes and anti-tobacco initiatives, demand remains strong, with a growing trend of consumers
shifting from bidis to cigarettes in recent years.

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Income Effect

The income effect refers to how a change in consumers' income affects their purchasing decisions.
In Bangladesh, rising incomes reduce demand for bidis while increasing demand for cigarettes.

Increase in Income: When consumers' income rises, they can afford to buy more of a product,
shifting the demand curve to the right (increase in demand).

Decrease in Income: A fall in income reduces purchasing power, shifting the demand curve to
the left (decrease in demand).

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Substitution Effect

The substitution effect occurs when the price of a product or service changes, making other goods
and services either more or less appealing. In Bangladesh, the availability of alternatives to
cigarettes and the demand for substitutes involving a possible departure from cigarettes e.g.
smokeless tobacco bidis, eCigarettes etc. have important effects on the demand for tobacco in
Bangladesh.

Increase in the Price of Cigarettes :

When the price of cigarettes increases due to a hike in taxes or due to an increase in production
cost, high-income consumers may switch to e-cigarettes but it’s likely that low-income consumers
will switch to cheaper alternatives like bidis or cheaper brands of cigarettes. As a result, the
demand for bidis and vaping products rises. Furthermore, Some consumers may want smokeless
tobacco products such as zarda or gul, which costs relatively less.

Decrease in the Price of Cigarettes :

Fall in the Price of Cigarettes– A fall in the price of cigarettes leads consumers to shift back to
cigarettes from substitute goods such as e-cigarettes and bidis. In this case, smokeless tobacco
buyers (zarda, gul) will reduce because cigarette has now become cheap and will be opted over
these products. More price-conscious consumers may opt for the premium/ better segment within
the cigarette category due to better affordability.

Supply
The supply of tobacco products in Bangladesh is supported by favorable agricultural conditions
and low production costs. Tobacco cultivation flourishes in areas such as Rangpur and Kushtia,
where the climate and soil are well-suited for its growth. The bidi industry relies on small-scale,
labor-intensive production, providing significant rural employment opportunities. Large
corporations like BAT and JTI dominate cigarette manufacturing, leveraging economies of scale
and efficient distribution networks. Despite strict regulations and anti-tobacco initiatives, supply
remains stable due to strong domestic demand and export potential. Access to raw materials and
inexpensive labor further ensures a steady supply of cigarettes and smokeless tobacco products
like zarda and gul.

9
10
Input Price

Increase in Input Price: Rising costs for inputs such as tobacco leaves, packaging materials, and
labor reduce profit margins for producers. Therefore supply will reduce as profitability decreases
and production is discouraged.

Decrease in Input Price: Reduced input costs allow producers to sustain or increase their profit
margins, motivating them to raise production levels. Additionally, lower costs enable producers to
offer products at more competitive prices, potentially enhancing exports. By improving
profitability and incentivizing production, lower input costs lead to an increase in supply.

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Effect of Government Regulations

Stricter Government Regulations: Enhanced government regulations, including higher taxes,

licensing requirements, or production quotas, increase production costs and reduce profit margins
for tobacco manufacturers. These measures discourage production, leading to a lower supply of
tobacco products. Furthermore, restrictions on land availability for tobacco farming and
requirements to meet environmental and labor standards add to the challenges and costs, further
limiting production.

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Relaxed Government Regulations: Loosening regulations, such as providing subsidies for
tobacco farming, reducing taxes, or simplifying licensing requirements, lowers production costs
and increases profitability for producers. These actions encourage increased production and a
greater supply of tobacco products. Additionally, relaxed export policies motivate producers to
scale up operations, boosting supply in both domestic and global markets.

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Price of Tobacco Products

Higher Prices for Tobacco Products: When the prices of tobacco products like cigarettes, bidis,
or smokeless tobacco increase, producers are motivated to increase production as higher prices
generally lead to greater profit margins. Therefore, supply increases.

Lower Prices for Tobacco Products: A decline in the prices of tobacco products reduces
profitability, making producers less inclined to expand their production levels. Therefore, supply
decreases.

Price Elasticity

Price elasticity of demand measures the degree to which the quantity demanded of a product
changes in response to changes in price. In the case of tobacco producers, The PED typically ranges
from inelastic (below 1) to somewhat elastic, meaning that a rise in price leads to a less

14
proportional decrease in the quantity demanded. So, inelastic demand means that price increases
can lead to more overall revenue because the quantity demanded decrease is smaller than the
increase in price. Similarly, if the government increases taxes on tobacco it can generate substantial
tax revenues with little reduction in consumption in the short term. Younger customers and low-
income customers tend to be price sensitive. Where younger consumers tend to shift to e-cigarettes,
low-income customers shift to smokeless tobacco products like zarda and gul. But if the overall
price is increased in the long run people might try to quit using tobacco. So, higher prices may be
a valuable tool for reduced tobacco use in these more price-sensitive populations. Over time, the
price elasticity of demand for tobacco could increase, as individuals may adjust their behavior
more over time.

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Changes in Consumer Spending Patterns

Tobacco products include items such as cigarettes, cigars, bidis, e-cigarettes, smokeless tobacco
products like zarda and gul . These products influence consumer spending patterns and are impacted
by factors like price sensitivity, economic conditions, and cultural norms surrounding tobacco use.
These elements collectively shape consumer behavior and financial decisions made by individuals
and households regarding tobacco consumption.

The use of tobacco products entails both direct financial costs and indirect effects on household
wellbeing. When consumers allocate money to tobacco instead of essential goods and services,
such as healthcare, education, or healthier food options, it can negatively impact their quality of
life. This is closely tied to the price elasticity of demand for tobacco products. For instance, when
tobacco prices rise, consumers with inelastic demand may continue purchasing tobacco but cut back
on other discretionary spending like clothing or entertainment. Conversely, if demand is elastic,
higher prices may prompt consumers to reduce or quit smoking and redirect their spending to other
priorities.

Recent increase in tobacco prices has shifted consumer spending patterns. This change underscores
the role of taxation in shaping demand. Government-imposed taxes on tobacco aim to mitigate
negative externalities, such as healthcare costs, by making these products more expensive. This
demonstrates that higher tobacco prices can significantly influence consumer purchasing behavior,
often encouraging healthier financial choices and reducing tobacco consumption.

Income Distribution and Equity

Tobacco usage harms low-income families and causes income disparity. These households tend to
spend a greater portion of their income on tobacco, which can create a vicious cycle of poverty and
health-care costs. While tobacco taxes can help to reduce use, they can also be regressive, putting
a significant economic burden on low-income customers. To address these equity challenges,
tailored interventions such as subsidized smoking cessation programs and public health education
must be implemented to assist at-risk individuals in quitting smoking.

16
Market Dynamics and Employment
The tobacco industry plays a huge role in economies, particularly in regions where tobacco
production and manufacturing are major sources of employment. Tobacco consumption affect the
supply chain, from farmers to retailers. A decline in demand for tobacco products can lead to job
losses in these sectors. Recent shift towards products like e-cigarettes or nicotine replacement
therapies has created a new market opportunity and employment prospects.

Government Policy
Tax can be described as a major source of income for the government. Higher taxes can, however,
result in decreased smoking as well as the related public health improvement, while simultaneously
presenting issues for striking a balance between revenue generation and public health objectives.
Policymakers need to also take into account economic effects on actors and the scope of illicit trade
in case of higher prices. Governments, in addition, suffer from costs associated with tobacco
regulation, anti-smoking law enforcement and public health education. These costs are required to
reduce the harms of tobacco use; however, they represent an economic cost that needs to be
controlled properly.

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Chapter 5: Challenges

Checking the influence of the tobacco sector on the microeconomic aspect of Bangladesh gives rise
to numerous challenges when examined from a microeconomic angle which includes aspects
relating to demand and supply, elasticity, market equilibrium, consumer behavior, opportunity cost,
pricing strategies, market structure, production cost etc. Thus, challenges are making the way
toward establishing useful policies and strategies for managing the economic and social impacts of
the tobacco sector.

The demands are inelastic : Tobacco products are addictive, that’s why their demand is relatively
inelastic, which creates challenges for tax measures designed to reduce consumption, because price
increases do not necessarily lead to price decreases. Supply Chain Weaknesses: Tobacco production
relies on certain climate and soil conditions, making the supply chain responsive to environmental
shifts and deterioration. Disruptions in the supply can lead to price volatility, affecting both growers
and end consumers.

Distorted market equilibrium: Government actions, such as providing subsidies for tobacco
farmers and implementing wicked tax systems, disrupt the natural market equilibrium. These
disruptions can cause unintended outcomes, such as overproduction or excessive reliance on low-
cost products like bidis. Illegal trade, including that of counterfeit tobacco products, conspire to
disrupt market balance, thereby weakening the ability of price and tax mechanisms to work.

Consumer Behavior Addiction-Driven Consumption : the addictive characteristics of tobacco

ruins the predictions of standard consumer behaviours that are generally assumed as rational and
utility oriented behaviours. .This makes it difficult to predict how consumers will respond to
changes in price, availability, and regulation.

Opportunity Cost For Farmers: Farmers sustain high opportunity cost they compromise their
land to tobacco instead of food or cash crops. Hence the profitability of tobacco does include some
longer term benefits of crop diversification.

For Consumers: Low‐income families often use a large part of their money for cigarettes, reducing
their ability to save on other necessities such as food, education, and healthcare.

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Pricing Mechanisms Tiered Tax Structures: The tiered taxation system in Bangladesh leads to
different pricing for various tobacco products, promoting the shift towards more available items
like bidis. This undermines the expected effects of taxation on overall consumption reduction.

The Oligopolistic Nature of Market : The tobacco market of Bangladesh is dominated by a small
number of large multinational companies. They create an oligopolistic market system which leads
to a lack of competition .

Informal Sector Problems: The bidi Market is an important part of the informal sector with low
income , poor working conditions and little regulation . This deepens socioeconomic inequality.

Environmental costs : Tobacco production and processing causes great environmental damages
such as soil erosion, deforestation and water pollution. These often go unrecognized in market
prices , leading to false perception of profitability.

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Recommendation

Based on the analysis of the microeconomic dynamics and challenges associated with the tobacco
industry in Bangladesh ,the following recommendations are proposed to address the economic,
social, and environmental issues while ensuring sustainable development.

• The experts have recommended an overhaul in the taxation policy. High taxation on all forms of
tobacco products must be added to reduce price variation and consumption.

• Implementing Minimum Price policy means no tobacco product will be cheaper than a certain
price.

• Efforts should be made to enhance awareness programs regarding health and economic costs of
tobacco consumption with the focus on rural and poor people.

• Partner with community leaders and local organizations to address sociocultural norms around
tobacco use.

• Government engagement is crucial in implementing tobacco cessation programs. These programs

offer subsidies in order to make the tools affordable, such as nicotine replacement therapy or
counselling services.

• Switching of tobacco farmers to high-yield, sustainable crop alternatives must be done. This can
include crop choices such as vegetables, fruits, or profitable cash crops such as jute and spices.

• Give Bidi workers skill development training and micro-loans to help them shift to alternate
livelihoods.

• Price stabilization funds should be established to protect farmers from the instability of their
income during the transition to alternative crops.

• Improvement in regulations of the market by enforcing laws. That is, existing anti-tobacco law
enforcement must be strengthened – advertising ban, sale to minor ban, public smoking ban, etc.

• Enhance border controls as well as surveillance mechanisms to monitor and penalize the illicit
trade and counterfeit tobacco products.

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• Make sure that pricing into the informal sector is more transparent, especially in relation to bidding
manufacture so that workers are protected.

• Multinational tobacco companies must comply with health warnings, marketing issues and
environmental regulations as per strict regulations by corporations.

To address environmental costs, we will advocate for sustainable farming practices including crop
rotation and use of organic farming techniques that would restore soils in areas where tobacco
production takes place.

• We must urge programs that encourage bearing and afforestation to reduce the extent of
deforestation due to tobacco curing. We must build proper disposal for waste generated by the
manufacturing of tobacco.

• Making sure that there is economic justice within the population for good health. Welfare schemes
for the tobacco sector workers should be more popular. This can create proper health insurance,
pension, and unemployment guarantees for the tobacco sector workers.

• Money should be invested in educational programs for children in tobacco-farming areas so as to

break the cycle of poverty and dependence on the industry.

• Give vocational training for adults so they can have a more diversified source of income.

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Conclusion

Tobacco industry is an important sector of Bangladesh economy which contributes toward

government revenue, employment and trade. Although it has benefits, it is quite expensive. The
public health impact of smoking is severe and also contributes to social inequality and
environmental harm. Although the industry makes a substantial contribution to the economy, its
long-term adverse effects are serious and irreversible. We need a strategy that will correct excessive
dependence on tobacco while allowing sustainable alternatives for you to power.

Creating industries which generate jobs and income without posing threat to the health of the people
is an important element of economic diversification. We need to ramp up laws and making sure
they are being enforced to get down tobacco use and illegal trade of tobacco products. We should
have more public health campaigns and awareness-raisers to stop human use and inform about the
dangers of smoking, especially in vulnerable and rural communities. There is also a requirement of
programmes to avert damage to the environment caused by tobacco production such as
deforestation, water pollution etc. We need to help farmers move to sustainable livelihoods to
reduce industry-related inequality.

The government, non-governmental groups, international organizations, and the tobacco business
need to collaborate and forge a coalition in this direction. By aligning its economic policies with
environmental and public health goals, Bangladesh can reduce its dependence on tobacco, improve
its citizens’ well-being and ensure a better future for coming generations.

22
Reference
Books

Mankiw, N. Gregory. (2018). Principles of microeconomics (8th ed.). Cengage Learning.

Boston, MA.

Samuelson, P. A., & Nordhaus, W. D. (2009). Economics (19th ed.). McGraw-Hill Irwin.

Websites

https://www.tobaccopreventioncessation.com/Economics-of-Smokeless-Tobacco-Taxation-
in-Bangladesh%2C105199%2C0%2C2.html

https://openknowledge.worldbank.org/bitstream/handle/10986/31953/Bangladesh-Overview-
of-Tobacco-Use-Tobacco-Control-Legislation-and-Taxation.pdf?sequence=1

https://www.intechopen.com/chapters/81953

https://www.tobaccotactics.org/article/bangladesh-country-profile/

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