Journal Article

The End of the Federal Tobacco Program: Economic Impacts of the Deregulation of U.S. Tobacco Production

A. Blake Brown, Randal R. Rucker and Walter N. Thurman

in Applied Economic Perspectives and Policy

Published on behalf of Agricultural and Applied Economics Association

Volume 29, issue 4, pages 635-655
Published in print January 2007 | ISSN: 2040-5790
Published online January 2007 | e-ISSN: 2040-5804 | DOI: https://dx.doi.org/10.1111/j.1467-9353.2007.00378.x
The End of the Federal Tobacco Program: Economic Impacts of the Deregulation of U.S. Tobacco Production

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In 2004, Congress ended the sixty-six-year-old federal tobacco program, effectively deregulating production and prices. With deregulation came a buyout package, with cigarette manufacturers agreeing to pay more than $3 billion in present value to quota owners and farmers. While the dollar values of compensation payments are known, the effects of the historic legislation on tobacco markets are uncertain. We examine these effects and their welfare consequences. We also consider the appropriateness of the buyout payments under alternative views of economic damages due to the quota system's demise.

Keywords: F130; I120; L510; L660; Q130; Q170; Q180

Journal Article.  9724 words.  Illustrated.

Subjects: Manufacturing ; International Trade ; Economics of Health ; Regulation and Industrial Policy ; Agricultural Economics

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