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Cigarette Taxes and the Master Settlement Agreement

Author

Listed:
  • Justin G. Trogdon
  • Frank A. Sloan

Abstract

In 1998, 46 states and the four major tobacco companies entered into the Master Settlement Agreement (MSA), which stipulated that the tobacco companies pay the states $206 billion over the next several years. Mean cigarette excise taxes rose substantially, nearly 90%, between 1998 and 2002. The goal of our empirical analysis is to assess whether the changes in cigarette excise taxes can be attributed to litigation brought by the states and the resulting settlements. Using a panel data difference-in-difference approach, the evidence suggests that litigation increased excise taxes: state cigarette excise taxes were approximately $0.10 higher post-MSA. (JEL H2, I1) Copyright 2006, Oxford University Press.

Suggested Citation

  • Justin G. Trogdon & Frank A. Sloan, 2006. "Cigarette Taxes and the Master Settlement Agreement," Economic Inquiry, Western Economic Association International, vol. 44(4), pages 729-739, October.
    • Handle: RePEc:oup:ecinqu:v:44:y:2006:i:4:p:729-739
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    File URL: http://hdl.handle.net/10.1093/ei/cbj045
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    Citations

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    Cited by:

    1. DeCicca, Philip & McLeod, Logan, 2008. "Cigarette taxes and older adult smoking: Evidence from recent large tax increases," Journal of Health Economics, Elsevier, vol. 27(4), pages 918-929, July.
    2. Anindya Sen & Tony Wirjanto, 2010. "Estimating the impacts of cigarette taxes on youth smoking participation, initiation, and persistence: empirical evidence from Canada," Health Economics, John Wiley & Sons, Ltd., vol. 19(11), pages 1264-1280, November.
    3. Gallet Craig A, 2011. "Determinants of Tobacco Control Funding: Evidence from U.S. States," Forum for Health Economics & Policy, De Gruyter, vol. 14(2), pages 1-12, July.
    4. W. Kip Viscusi & Joni Hersch, 2010. "Tobacco Regulation through Litigation: The Master Settlement Agreement," NBER Chapters, in: Regulation vs. Litigation: Perspectives from Economics and Law, pages 71-101, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • I1 - Health, Education, and Welfare - - Health

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