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Surely it's about economy of scale? Dunlop would need to sell a certain number of tyres per year to cover the cost of production and while a monopoly supply situation isn't necessarily desirable that has to be taken into account.
Presumably Michelin lost money on their Englebert racing tyres as they are no longer made and I suspect Dunlop have felt the impact made by Blockley's inroads into the market considerably, particularly for pre war cars.
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