Interstate Cigarette Bootlegging: Extent, Revenue Losses, and Effects of Government Intervention

Marie Thursby and Jerry Thursby ()

No 4763, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In this paper, we develop and estimate a model of commercial smuggling in which some, but not all, firms smuggle a portion of the cigarettes they sell. The model is used to examine the effects on interstate cigarette smuggling of the Contraband Cigarette Act and a change in the federal excise tax. We find that both policies have unintentional effects. While the Contraband Cigarette Act was imposed to reduce interstate smuggling, we find it had the opposite effect. In contrast, an increase in the federal tax is not intended to affect smuggling, but we find it increases the portion of cigarette sales that is commercially smuggled.

JEL-codes: H26 K42 (search for similar items in EconPapers)
Date: 1994-06
Note: ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Published as National Tax Journal (November 1999).

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