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The impact of the master settlement agreement on cigarette consumption

Author

Listed:
  • Frank A. Sloan

    (Duke University)

  • Justin G. Trogdon

    (University of Adelaide, Australia)

Abstract

In 1998, 46 states and the four major tobacco companies signed the Master Settlement Agreement (MSA), which stipulated that the tobacco companies pay states $206 billion over 25 years and take steps to reduce youth smoking. The remaining states settled separately. We sought to determine the effect of the settlements on demand for cigarettes. Using a nationwide sample from 1990 to 2002, we estimated a model of the decision to smoke cigarettes. The settlements affected smoking primarily through price increases for cigarettes, although there was evidence that other policy instruments influenced smoking rates for younger smokers. By 2002, the settlements had reduced overall smoking rates by 13 percent for ages 18 to 20 and older than 65 and 5 percent for ages 21 to 64. © 2004 by the Association for Public Policy Analysis and Management.

Suggested Citation

  • Frank A. Sloan & Justin G. Trogdon, 2004. "The impact of the master settlement agreement on cigarette consumption," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 23(4), pages 843-855.
  • Handle: RePEc:wly:jpamgt:v:23:y:2004:i:4:p:843-855
    DOI: 10.1002/pam.20050
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    File URL: http://hdl.handle.net/10.1002/pam.20050
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    References listed on IDEAS

    as
    1. Frank A. Sloan & Justin G. Trogdon, 2004. "Litigation and the Political Clout of the Tobacco Companies: Cigarette Taxes, Prices, and the Master Settlement Agreement," HEW 0411002, EconWPA.
    2. Chaloupka, Frank J. & Warner, Kenneth E., 2000. "The economics of smoking," Handbook of Health Economics,in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 29, pages 1539-1627 Elsevier.
    3. C Czart & RL Pacula & RJ Chaloupka & H Wechsler, 2001. "The Impact Of Prices And Control Policies On Cigarette Smoking Among College Students," Contemporary Economic Policy, Western Economic Association International, vol. 19(2), pages 135-149, April.
    4. Becker, Gary S & Murphy, Kevin M, 1988. "A Theory of Rational Addiction," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 675-700, August.
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    Citations

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    Cited by:

    1. Bishop, James, 2015. "Interacting effects of state cigarette taxes on smoking participation," MPRA Paper 66609, University Library of Munich, Germany.
    2. Frank A. Sloan & Justin G. Trogdon, 2004. "Litigation and the Political Clout of the Tobacco Companies: Cigarette Taxes, Prices, and the Master Settlement Agreement," HEW 0411002, EconWPA.
    3. Sloan, Frank A. & Trogdon, Justin G. & Mathews, Carrie A., 2005. "Litigation and the value of tobacco companies," Journal of Health Economics, Elsevier, vol. 24(3), pages 427-447, May.
    4. 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.
    5. Carpenter, Christopher & Cook, Philip J., 2008. "Cigarette taxes and youth smoking: New evidence from national, state, and local Youth Risk Behavior Surveys," Journal of Health Economics, Elsevier, vol. 27(2), pages 287-299, March.
    6. 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.
    7. Goel, Rajeev K. & Nelson, Michael A., 2007. "The Master Settlement Agreement and cigarette tax policy," Journal of Policy Modeling, Elsevier, vol. 29(3), pages 431-438.
    8. 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.
    9. Goel, Rajeev K., 2013. "Where to snuff the puff? Relative effectiveness of U.S. smoking control policies," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 44(C), pages 97-102.
    10. Levy, Douglas E. & Meara, Ellen, 2006. "The effect of the 1998 Master Settlement Agreement on prenatal smoking," Journal of Health Economics, Elsevier, vol. 25(2), pages 276-294, March.
    11. Ian A. MacKenzie & Markus Ohndorf, 2014. "Coasean Bargaining in the Presence of Pigouvian Taxation: Revisiting the Buchanan-Stubblebine-Turvey Theorem," Discussion Papers Series 515, School of Economics, University of Queensland, Australia.
    12. Craig A. Gallet & Gary A. Hoover & Junsoo Lee, 2009. "The Determinants Of Laws Restricting Youth Access To Tobacco," Contemporary Economic Policy, Western Economic Association International, vol. 27(1), pages 16-27, January.
    13. David Simon, 2013. "Does Early Life Exposure to Cigarette Smoke Permanently Harm Childhood Health? Evidence from Cigarette Tax Hikes," Working papers 2013-21, University of Connecticut, Department of Economics, revised May 2015.
    14. Christopher Carpenter & Philip J. Cook, 2007. "Cigarette Taxes and Youth Smoking: New Evidence from National, State, & Local Youth Risk Behavior Surveys," NBER Working Papers 13046, National Bureau of Economic Research, Inc.
    15. MacKenzie, Ian A. & Ohndorf, Markus, 2016. "Coasean bargaining in the presence of Pigouvian taxation," Journal of Environmental Economics and Management, Elsevier, vol. 75(C), pages 1-11.

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