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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. Grossman, Gene M, 1981. "The Theory of Domestic Content Protection and Content Preference," The Quarterly Journal of Economics, MIT Press, vol. 96(4), pages 583-603, November.
  2. Krishna, Kala & Itoh, Motoshige, 1988. "Content Protection and Oligopolistic Interactions," Review of Economic Studies, Wiley Blackwell, vol. 55(1), pages 107-25, January.
  3. Vousden, Neil, 1987. "Content protection and tariffs under monopoly and competition," Journal of International Economics, Elsevier, vol. 23(3-4), pages 263-282, November.
  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. Gary S. Becker & Michael Grossman & Kevin M. Murphy, 1990. "An Empirical Analysis of Cigarette Addiction," University of Chicago - George G. Stigler Center for Study of Economy and State 61, Chicago - Center for Study of Economy and State.
  6. Beghin, John C. & Sumner, D., 1992. "Domestic Content Requirements with Bilateral Monopoly," Staff General Research Papers 1571, Iowa State University, Department of Economics.
  7. Beghin, John C. & Chang, R., 1992. "Differentiated Products and Supply Controls in the Analysis of Agricultural Policy Reform: The Case of Tobacco," Staff General Research Papers 1574, Iowa State University, Department of Economics.
  8. Hillman, Jimmye S., 1996. "Nontariff Agricultural Trade Barriers Revisited," Working Papers 14602, International Agricultural Trade Research Consortium.
  9. Rezitis, Anthony N. & Brown, A. Blake & Foster, William E., 1998. "Adjustment costs and dynamic factor demands for U.S. cigarette manufacturing," Agricultural Economics, Blackwell, vol. 18(3), pages 217-231, May.
  10. Hu, Fan & Beghin, John C., 1994. "Declining U.S. Tobacco Exports To Australia: A Derived Demand Approach To Competitiveness," Working Papers 51224, International Agricultural Trade Research Consortium.
  11. 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.
  12. Michael L. Mussa, 1984. "The Economics of Content Protection," NBER Working Papers 1457, National Bureau of Economic Research, Inc.
  13. 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.
  14. Hollander, Abraham, 1987. "Content protection and transnational monopoly," Journal of International Economics, Elsevier, vol. 23(3-4), pages 283-297, November.
  15. Chaloupka, Frank, 1991. "Rational Addictive Behavior and Cigarette Smoking," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 722-42, August.
  16. 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..
  17. 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.
  18. 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.
  19. 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.
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