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Impact of domestic content requirement on the US tobacco and cigarette industries

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

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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Article provided by Blackwell in its journal Agricultural Economics.

Volume (Year): 15 (1997)
Issue (Month): 3 (January)
Pages: 201-212

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Handle: RePEc:eee:agecon:v:15:y:1997:i:3:p:201-212
Contact details of provider: Web page: http://www.blackwell-synergy.com/loi/agec

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  1. Ippolito, Pauline M. & Ippolito, Richard A., 1984. "Measuring the value of life saving from consumer reactions to new information," Journal of Public Economics, Elsevier, vol. 25(1-2), pages 53-81, November.
  2. Michael L. Mussa, 1984. "The Economics of Content Protection," NBER Working Papers 1457, National Bureau of Economic Research, Inc.
  3. Beghin, John C. & Lovell, C. A.K., 1993. "Trade and Efficiency Effects of Domestic Content Protection: The Australian Tobacco and Cigarette Industries," Staff General Research Papers 1601, Iowa State University, Department of Economics.
  4. Munk, Bernard, 1969. "The Welfare Costs of Content Protection: The Automotive Industry in Latin America," Journal of Political Economy, University of Chicago Press, vol. 77(1), pages 85-98, Jan./Feb..
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  8. Vousden, Neil, 1987. "Content protection and tariffs under monopoly and competition," Journal of International Economics, Elsevier, vol. 23(3-4), pages 263-282, November.
  9. Gary S. Becker & Michael Grossman & Kevin M. Murphy, 1990. "An Empirical Analysis of Cigarette Addiction," NBER Working Papers 3322, National Bureau of Economic Research, Inc.
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  11. John Beghin & Fan Hu, 1995. "Declining U.S. Tobacco Exports to Australia: A Derived Demand Approach to Competitiveness," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(2), pages 260-267.
  12. Kala Krishna & Motoshige Itoh, 1986. "Content Protection and Oligopolistic Interactions," NBER Working Papers 1843, National Bureau of Economic Research, Inc.
  13. Sumner, Daniel A, 1981. "Measurement of Monopoly Behavior: An Application to the Cigarette Industry," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 1010-19, October.
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  15. 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, vol. 8(1), pages 127-49, January.
  16. Hillman, Jimmye S., 1996. "Nontariff Agricultural Trade Barriers Revisited," Working Papers 14602, International Agricultural Trade Research Consortium.
  17. Hollander, Abraham, 1987. "Content protection and transnational monopoly," Journal of International Economics, Elsevier, vol. 23(3-4), pages 283-297, November.
  18. Frank J. Chaloupka, 1990. "Rational Addictive Behavior and Cigarette Smoking," NBER Working Papers 3268, National Bureau of Economic Research, Inc.
  19. 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, vol. 10(1), pages 43-64, May.
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