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Impact of Domestic Content Requirement on the U.S. Tobacco and Cigarette Industries

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  • Beghin, John C.
  • Brown, A. Blake
  • Zaini, M. Hasyim

Abstract

Using a log-linear equilibrium displacement model we quantify the impact of the recent domestic tobacco content requirement on US cigarette manufacturing. We investigate effects on US growers and manufacturers, and competing tobacco imports. The policy increased domestic use of US-grown tobacco, but induced a small negative output effect. Tobacco imports decreased substantially. The paper also discusses the political-economic incentives for US manufacturers to comply with such policies. The political cooperation between US growers and manufacturers decreases the opposition of the latter to protectionist policies championed by the former.

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Bibliographic Info

Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 1483.

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Date of creation: 01 Jan 1997
Date of revision:
Publication status: Published in Agricultural Economics 1997, vol. 15, pp. 201-212
Handle: RePEc:isu:genres:1483

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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
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Web page: http://www.econ.iastate.edu
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References

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  1. Frank J. Chaloupka, 1990. "Rational Addictive Behavior and Cigarette Smoking," NBER Working Papers 3268, National Bureau of Economic Research, Inc.
  2. Krishna, Kala & Itoh, Motoshige, 1988. "Content Protection and Oligopolistic Interactions," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 55(1), pages 107-25, January.
  3. Beghin, John C. & Hu, Fan, 1995. "Declining U.S. Tobacco Exports to Australia: A Derived Demand Approach to Competitiveness," Staff General Research Papers, Iowa State University, Department of Economics 1606, Iowa State University, Department of Economics.
  4. Beghin, John C & Lovell, C A Knox, 1993. "Trade and Efficiency Effects of Domestic Content Protection: The Australian Tobacco and Cigarette Industries," The Review of Economics and Statistics, MIT Press, vol. 75(4), pages 623-31, November.
  5. Beghin, John C. & Sumner, D., 1992. "Domestic Content Requirements with Bilateral Monopoly," Staff General Research Papers, Iowa State University, Department of Economics 1571, Iowa State University, Department of Economics.
  6. Rezitis, Anthony N. & Brown, A. Blake & Foster, William E., 1998. "Adjustment costs and dynamic factor demands for U.S. cigarette manufacturing," Agricultural Economics: The Journal of the International Association of Agricultural Economists, International Association of Agricultural Economists, International Association of Agricultural Economists, vol. 18(3), May.
  7. Becker, Gary S & Grossman, Michael & Murphy, Kevin M, 1994. "An Empirical Analysis of Cigarette Addiction," American Economic Review, American Economic Association, American Economic Association, vol. 84(3), pages 396-418, June.
  8. Michael L. Mussa, 1984. "The Economics of Content Protection," NBER Working Papers 1457, National Bureau of Economic Research, Inc.
  9. Hollander, Abraham, 1987. "Content protection and transnational monopoly," Journal of International Economics, Elsevier, Elsevier, vol. 23(3-4), pages 283-297, November.
  10. Carol Horton Tremblay & Victor J. Tremblay, 1995. "The Impact Of Cigarette Advertising On Consumer Surplus, Profit, And Social Welfare," Contemporary Economic Policy, Western Economic Association International, vol. 13(1), pages 113-124, 01.
  11. Grossman, Gene M, 1981. "The Theory of Domestic Content Protection and Content Preference," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 96(4), pages 583-603, November.
  12. Hillman, Jimmye S., 1996. "Nontariff Agricultural Trade Barriers Revisited," Working Papers, International Agricultural Trade Research Consortium 14602, International Agricultural Trade Research Consortium.
  13. Beghin, John & Chang, Ruey-er, 1992. "Differentiated products and supply controls in the analysis of agricultural policy reform: the case of tobacco," Agricultural Economics, Blackwell, Blackwell, vol. 7(3-4), pages 301-315, October.
  14. Takacs, Wendy E, 1994. "Domestic Content and Compensatory Export Requirements: Protection of the Motor Vehicle Industry in the Philippines," World Bank Economic Review, World Bank Group, World Bank Group, vol. 8(1), pages 127-49, January.
  15. Munk, Bernard, 1969. "The Welfare Costs of Content Protection: The Automotive Industry in Latin America," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 77(1), pages 85-98, Jan./Feb..
  16. Wasserman, Jeffrey & Manning, Willard G. & Newhouse, Joseph P. & Winkler, John D., 1991. "The effects of excise taxes and regulations on cigarette smoking," Journal of Health Economics, Elsevier, Elsevier, vol. 10(1), pages 43-64, May.
  17. Vousden, Neil, 1987. "Content protection and tariffs under monopoly and competition," Journal of International Economics, Elsevier, Elsevier, vol. 23(3-4), pages 263-282, November.
  18. Sumner, Daniel A, 1981. "Measurement of Monopoly Behavior: An Application to the Cigarette Industry," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 89(5), pages 1010-19, October.
  19. Ippolito, Pauline M. & Ippolito, Richard A., 1984. "Measuring the value of life saving from consumer reactions to new information," Journal of Public Economics, Elsevier, Elsevier, vol. 25(1-2), pages 53-81, November.
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Cited by:
  1. Metcalfe, Mark R., 2000. "Environmental Regulation And Implications For U.S. Pork Exports," 2000 Annual meeting, July 30-August 2, Tampa, FL, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 21808, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. Gale, H. Frederick, Jr. & Foreman, Linda F. & Capehart, Thomas C., Jr., 2000. "Tobacco And The Economy: Farms, Jobs, And Communities," Agricultural Economics Reports, United States Department of Agriculture, Economic Research Service 34007, United States Department of Agriculture, Economic Research Service.
  3. Metcalfe, Mark R., 2001. "Environmental Regulation And Implications For Competitiveness In International Pork Trade," International Trade in Livestock Products Symposium, January 18-19, 2001, Auckland, New Zealand, International Agricultural Trade Research Consortium 14565, International Agricultural Trade Research Consortium.
  4. Metcalfe, Mark R., 2002. "Environmental Regulation And Implications For Competitiveness In International Pork Trade," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, Western Agricultural Economics Association, vol. 27(01), July.

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