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Impact of domestic content requirement on the US tobacco and cigarette industries
Author(s) -
Beghin John C.,
Brown A. Blake,
Zaini M. Hasyim
Publication year - 1997
Publication title -
agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.29
H-Index - 82
eISSN - 1574-0862
pISSN - 0169-5150
DOI - 10.1111/j.1574-0862.1997.tb00432.x
Subject(s) - protectionism , incentive , opposition (politics) , cultivation of tobacco , economics , tobacco industry , politics , commercial policy , international economics , international trade , business , agricultural economics , agriculture , market economy , political science , ecology , law , biology
Using a log‐linear equilibrium displacement model we quantify the impact of the recent domestic tobacco content requirement on US cigarette manufacturing. We investigate effects on US growers and manufacturers, and competing tobacco imports. The policy increased domestic use of US‐grown tobacco, but induced a small negative output effect. Tobacco imports decreased substantially. The paper also discusses the political–economic incentives for US manufacturers to comply with such policies. The political cooperation between US growers and manufacturers decreases the opposition of the latter to protectionist policies championed by the former.