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Price Versus Quota Reductions: U.S. Flue-Cured Tobacco Policy

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  • Brown, A. Blake
  • Martin, Laura L.

Abstract

Declining domestic cigarette consumption, increased global competition, and loss of import restrictions indicate decreased demand for U.S. flue-cured tobacco. The effects of 10% declines in domestic and export demand are evaluated under a policy of reducing quota to maintain price versus a policy of allowing price to fall to maintain quota. Changes in prices, quantities, revenues, and economic rents are simulated. Losses to nonfarming quota owners are minimized under a policy of price maintenance, while losses in revenues to tobacco-producing areas are minimized by a policy of quota maintenance. Aggregate losses to tobacco growers are greater under a policy of quota maintenance.

Suggested Citation

  • Brown, A. Blake & Martin, Laura L., 1996. "Price Versus Quota Reductions: U.S. Flue-Cured Tobacco Policy," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 28(2), pages 1-8, December.
    • Handle: RePEc:ags:joaaec:15112
    DOI: 10.22004/ag.econ.15112
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    References listed on IDEAS

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    Cited by:

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    2. Kelly Tiller & Shiferaw Feleke & Jane Starnes, 2013. "Federal excise tax increase and its effects on U.S. tobacco production," Empirical Economics, Springer, vol. 44(2), pages 701-717, April.
    3. Jan Hendrik Preißler-Jebe, Korbinian von Blanckenburg, Alexander Geist, "undated". "Comparing Cartel Behavior: A Simulation Analysis with the System of Cartel Markers (SCM)," Working Papers 201041, Institute of Spatial and Housing Economics, Munster Universitary.
    4. Tiller, Kelly & Feleke, Shiferaw T. & Starnes, Jane H., 2011. "Economic Welfare Effects of the FDA Regulation of Tobacco Products on Tobacco Growers," Review of Applied Economics, Lincoln University, Department of Financial and Business Systems, vol. 7(1-2), pages 1-16, March.

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