Premium
CIGARETTE TAXES AND THE MASTER SETTLEMENT AGREEMENT
Author(s) -
TROGDON JUSTIN G.,
SLOAN FRANK A.
Publication year - 2006
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1093/ei/cbj045
Subject(s) - excise , settlement (finance) , economics , panel data , state (computer science) , demographic economics , finance , econometrics , macroeconomics , algorithm , computer science , payment
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 )