A front-page news article about a potential merger between the Lorillard and Reynolds American cigarette companies reports, "Antitrust regulators in Washington are certain to scrutinize a deal that would effectively leave cigarette sales — and pricing — in the hands of a duopoly."
That's inaccurate. Cigarette pricing wouldn't be in the hands of a duopoly. It would be in the same hands it is in now — the hands of the government, which imposes a federal tax of $1.01 for a pack of 20 small cigarettes, $2.11 for a pack of 20 large cigarettes, along with state and local taxes that in New York City reach a combined $5.85 a pack. With taxes totaling $6, $7, or $8 a pack, claiming that pricing is in the hands of the cigarette companies is nonsense.