EconPapers    
Economics at your fingertips  
 

Public Policy and Market Competition: How the Master Settlement Agreement Changed the Cigarette Industry

Federico Ciliberto () and Nicolai Kuminoff

The B.E. Journal of Economic Analysis & Policy, 2010, vol. 10, issue 1, 1-46

Abstract: This paper investigates the large and unexpected increase in cigarette prices that followed the 1997 Master Settlement Agreement (MSA). We integrate key features of rational addiction theory into a discrete-choice model of the demand for a differentiated product. We find that following the MSA firms set prices on a more elastic region of their demand curves. Using these estimates, we predict prices that would be charged under a variety of industry structures and pricing rules. Under the assumptions of firms perfect foresight and constant marginal costs, we fail to reject the hypothesis that firms collude on a dynamic pricing strategy.

Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
https://www.degruyter.com/view/j/bejeap.2010.10.1/ ... .2362.xml?format=INT (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
Working Paper: Public Policy and Market Competition: How the Master Settlement Agreement Changed the Cigarette Industry (2010) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:bejeap:v:10:y:2010:i:1:n:63

Ordering information: This journal article can be ordered from
https://www.degruyter.com/view/j/bejeap

Access Statistics for this article

The B.E. Journal of Economic Analysis & Policy is currently edited by Hendrik Jürges and Sandra Ludwig

More articles in The B.E. Journal of Economic Analysis & Policy from De Gruyter
Bibliographic data for series maintained by Peter Golla ().

 
Page updated 2020-07-07
Handle: RePEc:bpj:bejeap:v:10:y:2010:i:1:n:63