IDEAS home Printed from https://ideas.repec.org/a/ags/joaaec/155414.html
   My bibliography  Save this article

The U.S. Tobacco Buyout: A Partial and General Equilibrium Analysis

Author

Listed:
  • Schmitz, Andrew
  • Haynes, D.J.
  • Schmitz, Troy G.
  • Schmitz, Evan D.

Abstract

This article analyzes the impact of removing the U.S. tobacco program in both a partial and general welfare economics framework. In a partial-equilibrium framework, a consumer taxfunded quota buyout can result in producer gains, consumer losses, net losses resulting from higher prices, and deadweight losses. In a general-equilibrium framework, society can gain from the buyout resulting from considerable potential savings from reduced healthcare costs attributable to a reduction in smoking. Additionally, we present a model that addresses the addictive qualities of tobacco while considering the effects of the quota buyout. We also conclude that another possible effect of the buyout is an increase in worker productivity because employees who are able to quit smoking reduce the amount of smoking-related sick days taken.

Suggested Citation

  • Schmitz, Andrew & Haynes, D.J. & Schmitz, Troy G. & Schmitz, Evan D., 2013. "The U.S. Tobacco Buyout: A Partial and General Equilibrium Analysis," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 45, pages 1-9, August.
    • Handle: RePEc:ags:joaaec:155414
    DOI: 10.22004/ag.econ.155414
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/155414/files/jaae453ip4.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.155414?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Fulginiti, Lilyan & Perrin, Richard, 1993. "The Theory and Measurement of Producer Response under Quotas," The Review of Economics and Statistics, MIT Press, vol. 75(1), pages 97-106, February.
    2. Brown, A. Blake & Snell, William M. & Tiller, Kelly H., 1999. "The Changing Political Environment for Tobacco—Implications for Southern Tobacco Farmers, Rural Economies, Taxpayers, and Consumers," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 31(2), pages 291-308, August.
    3. Chan, Kitty Kay & Capehart, Thomas C., Jr., 2004. "Health Concerns or Price: Which Takes Credit for Declining Cigarette Consumption in the U.S.?," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 19(1), pages 1-4.
    4. David L. Weimer & Aidan R. Vining & Randall K. Thomas, 2009. "Cost–benefit analysis involving addictive goods: contingent valuation to estimate willingness‐to‐pay for smoking cessation," Health Economics, John Wiley & Sons, Ltd., vol. 18(2), pages 181-202, February.
    5. Brown, A. Blake & Snell, William M. & Tiller, Kelly, 1999. "The Changing Political Environment For Tobacco -- Implications For Southern Tobacco Farmers, Rural Economies, Taxpayers, And Consumers," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 31(2), pages 1-18, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gale, H. Frederick, Jr. & Foreman, Linda F. & Capehart, Thomas C., Jr., 2000. "Tobacco And The Economy: Farms, Jobs, And Communities," Agricultural Economic Reports 34007, United States Department of Agriculture, Economic Research Service.
    2. Marchant, Mary A., 1999. "Hopes and Fears: The New World Trade Negotiations and Southern Agriculture," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 31(2), pages 185-200, August.
    3. A. Blake Brown & Randal R. Rucker & Walter N. Thurman, 2007. "The End of the Federal Tobacco Program: Economic Impacts of the Deregulation of U.S. Tobacco Production," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 29(4), pages 635-655.
    4. Beach, Robert H. & Jones, Alison Snow & Tooze, Janet A., 2008. "Tobacco Farmer Interest and Success in Income Diversification," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 40(1), pages 1-19, April.
    5. Tiller, Kelly & Ray, Daryll E. & Slinsky, Stephen P., 1999. "Changing Tobacco Markets: Effects On Burley Tobacco Farms," 1999 Annual meeting, August 8-11, Nashville, TN 21595, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Jones, Alison Snow & Beach, Robert H. & Johnston, Stephen A., 2005. "Tobacco Farmer Interest and Success in Diversification," 2005 Annual meeting, July 24-27, Providence, RI 19151, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Kelly J. Tiller & Shiferaw T. Feleke & Jane H. Starnes, 2010. "A discrete‐time hazard analysis of the exit of burley tobacco growers in Tennessee, North Carolina, and Virginia," Agricultural Economics, International Association of Agricultural Economists, vol. 41(5), pages 397-408, September.
    8. Raper, Kellie Curry & Love, H. Alan, 1999. "MONOPSONY POWER IN MULTIPLE INPUT MARKETS: A Nonparametric Approach," Staff Paper Series 11656, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    9. Jongeneel, Roelof A. & Ge, Lan, 2005. "Explaining Growth in Dutch Agriculture: Prices, Public R&D, and Technological Change," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24573, European Association of Agricultural Economists.
    10. Tiller, Kelly & English, Burton C. & Menard, R. Jamey, 2004. "Tobacco Quota Buyout Legislation: Economic Impacts In The Southeast," 2004 Annual Meeting, February 14-18, 2004, Tulsa, Oklahoma 34676, Southern Agricultural Economics Association.
    11. Viaggi, Davide & Raggi, Meri & Gomez y Paloma, Sergio, 2011. "Farm-household investment behaviour and the CAP decoupling: Methodological issues in assessing policy impacts," Journal of Policy Modeling, Elsevier, vol. 33(1), pages 127-145, January.
    12. Sckokai, Paolo, 2001. "The Common Agricultural Policy In Econometric Models," Working Papers 14800, National Institute of Agricultural Economics, Italy - INEA, Osservatorio Sulle Politiche Agricole dell'UE.
    13. Xavier Delache & Catherine Goudounèche & Hervé Guyomard & Xavier Irz & Louis-Pascal Mahé, 1995. "Analyse micro-économique d'un marché des droits à produire en agriculture : application aux quotas laitiers en France," Économie et Prévision, Programme National Persée, vol. 117(1), pages 61-75.
    14. Bureau, Jean-Christophe, et al, 1997. "Quota Mobility in the European Sugar Regime," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 24(1), pages 1-30.
    15. Alejandro Plastina & Lilyan Fulginiti, 2012. "Rates of return to public agricultural research in 48 US states," Journal of Productivity Analysis, Springer, vol. 37(2), pages 95-113, April.
    16. Helen G. Levy & Edward C. Norton & Jeffrey A. Smith, 2018. "Tobacco Regulation and Cost-Benefit Analysis: How Should We Value Foregone Consumer Surplus?," American Journal of Health Economics, MIT Press, vol. 4(1), pages 1-25, Winter.
    17. Rucker, Randal R & Thurman, Walter N & Sumner, Daniel A, 1995. "Restricting the Market for Quota: An Analysis of Tobacco Production Rights with Corroboration from Congressional Testimony," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 142-175, February.
    18. 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.
    19. Barbara Hutniczak & Niels Vestergaard & Dale Squires, 2019. "Policy Change Anticipation in the Buyback Context," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(1), pages 111-132, May.
    20. Daniel J. Phaneuf & Catherine L. Kling & Joseph A. Herriges, 2000. "Estimation and Welfare Calculations in a Generalized Corner Solution Model with an Application to Recreation Demand," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 83-92, February.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:joaaec:155414. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/saeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.