Business, Politics, and Cigarettes: Multiple Levels, Multiple Agendas

Business, Politics, and Cigarettes: Multiple Levels, Multiple Agendas

Business, Politics, and Cigarettes: Multiple Levels, Multiple Agendas

Business, Politics, and Cigarettes: Multiple Levels, Multiple Agendas

Synopsis

The American cigarette industry is again facing enormous pressure from various groups whose goal is a "smoke free" society. What differentiates this present wave from the previous two waves of regulation faced by the cigarette industry is the severity with which these measures are applied by the state and local government who are enacting anti-smoking laws and regulations and increased excise taxes. Cigarette taxes are a lucrative revenue for the states, which they must ultimately trade-off with their stated goals of deterring smoking. Frequently, in spite of the needs of public health, states find themselves competing with one another for these excise tax revenues and cigarette sales, making them the primary point of challenge for the cigarette industry.

Excerpt

The evolution of this book has taken many years. The general outline for the book follows that of my doctoral dissertation on the tobacco industry, which was completed in 1988. Obviously, there have been a great many developments that have had a dramatic impact on the cigarette / tobacco industry in the intervening seven years. These changes and the changes in my own thinking of how the business and public policy processes interact with one another had to be incorporated in the manuscript. Hence, this book has had a rather long gestation period (ten years!) but I hope it will give the reader a unique view of this immensely profitable but controversial industry.

There have been many studies (both books and articles) of the cigarette / tobacco industry. Therefore, any review of the literature on the cigarette industry is bound to be incomplete. What follows is certainly a very brief synopsis of this literature that should give the reader a sense of the variety of research on the cigarette industry. This research can be broken into three categories: economic studies, public policy studies, and business policy studies. The classic economic studies of the cigarette industry were conducted by Tennant and Nichols in the 1950s. These books focused on the structure of the cigarette industry as an oligopoly and the effect that this structure had on the pricing of cigarettes and on the suppliers of tobacco. This question is still debated even today. Economists (such as Harris, Becker, and Murphy) have also been fascinated with estimating the elasticity of demand for cigarettes, especially in trying to measure the effect that excise tax increases have had on cigarette sales.

With the coming of the smoking and health issue in the 1960s, economists turned their attention to measuring the effects of various public policy interventions on tobacco sales, such as advertising and smoking bans, as well as excise tax increases. The work of Tollison, Bass, Leu, and Hamilton typify this type of study and contributed greatly to our understanding of the effects that various actions taken by the federal . . .

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