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Economic Welfare Effects of the FDA Regulation of Tobacco Products on Tobacco Growers

Author

Listed:
  • Tiller, Kelly
  • Feleke, Shiferaw T.
  • Starnes, Jane H.

Abstract

The Family Smoking Prevention and Tobacco Control Act of 2009 (FSPTCA) became federal law on June 22, 2009, authorizing the U.S. Food and Drug Administration (FDA) to regulate the manufacturing and marketing of tobacco products in the country. This study examines the potential economic welfare implications for tobacco farms using the Equilibrium Displacement Model. Results suggest that the FDA regulation of tobacco products could induce a significant fall in domestic cigarette sales, leading to a significant loss in tobacco revenue and economic benefits. Therefore, despite the fact that tobacco growers are excluded from FDA authority in the FSPTCA of 2009, they are indirectly and adversely affected.

Suggested Citation

  • 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.
  • Handle: RePEc:ags:reapec:143422
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    File URL: http://ageconsearch.umn.edu/record/143422/files/3-Kelly%20J%20Tiller.pdf
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    References listed on IDEAS

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    4. Lilyan E. Fulginiti & Richard K. Perrin, 1992. "Theory and Measurement of Producer Response under Quotas, The," Center for Agricultural and Rural Development (CARD) Publications 92-wp94, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    5. Schroeter, John R, 1988. "Estimating the Degree of Market Power in the Beef Packing Industry," The Review of Economics and Statistics, MIT Press, vol. 70(1), pages 158-162, February.
    6. 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.
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