Litigation and the Political Clout of the Tobacco Companies: Cigarette Taxes, Prices, and the Master Settlement Agreement

Frank Allen Sloan () and Justin G. Trogdon ()

HEW from EconWPA

Abstract: The goal of our empirical analysis is to assess whether the changes in cigarette excise taxes and cigarette prices can be attributed to litigation brought by the states and the resulting settlements, holding other factors constant. Using pre-post as well as state excise taxes on beer as controls, the evidence provides support for the view that litigation changes the political equilibrium: state cigarette excise taxes were approximately $0.10 higher in the post-MSA period. For tobacco prices, the increases are attributable to the method the settlement used to structure payments as well as the market structure of the cigarette industry.

Keywords: Master Settlement Agreement; excise tax; tobacco (search for similar items in EconPapers)
JEL-codes: I12 K13 L66 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hea, nep-law and nep-pol
Date: 2004-11-03
Note: Type of Document - pdf; pages: 42
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