Hostname: page-component-586b7cd67f-dlnhk Total loading time: 0 Render date: 2024-11-27T23:44:20.939Z Has data issue: false hasContentIssue false
  • English
  • Français

Price versus Quota Reductions: U.S. Flue-Cured Tobacco Policy

Published online by Cambridge University Press:  28 April 2015

A. Blake Brown  and
Laura L. Martin
A. Blake Brown
Affiliation:
Department of Agricultural and Resource Economics, North Carolina State University
Laura L. Martin
Affiliation:
Department of Agricultural Economics, Michigan State University
Get access Rights & Permissions [Opens in a new window]

Abstract

Declining domestic cigarette consumption, increased global competition, and loss of import restrictions indicate decreased demand for U.S. flue-cured tobacco. The effects of 10% declines in domestic and export demand are evaluated under a policy of reducing quota to maintain price versus a policy of allowing price to fall to maintain quota. Changes in prices, quantities, revenues, and economic rents are simulated. Losses to nonfarming quota owners are minimized under a policy of price maintenance, while losses in revenues to tobacco-producing areas are minimized by a policy of quota maintenance. Aggregate losses to tobacco growers are greater under a policy of quota maintenance.

Keywords

flue-curedpolicyprice reductionquotatobacco
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 28 , Issue 2 , December 1996 , pp. 445 - 452
Copyright
Copyright © Southern Agricultural Economics Association 1996

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Babcock, B., and Foster, W.. “Economic Rents Under Supply Controls with Marketable Quota.” Amer. J. Agr. Econ. 74(1992):630–37.CrossRefGoogle Scholar
Barnett, T.O. “Report of the Advisory Committee on the Government Flue-Cured and Burley Tobacco Program.” Covington & Burling, Attorneys, Washington DC, 27 April 1995.Google Scholar
Becker, G.S., Grossman, M., and Murphy, K.M.. “An Empirical Analysis of Cigarette Addiction.” Amer. Econ. Rev. 84(June 1994):396–418.Google Scholar
Beghin, J., and Chang, R.. “Differentiated Products and Supply Controls in the Analysis of Agricultural Policy Reform: The Case of Tobacco.” Agr. Econ. 7(October 1992):301–15.CrossRefGoogle Scholar
Brown, A.B. “Cigarette Taxes and Smoking Restrictions: Impacts and Policy Implications.” Amer. J. Agr. Econ. 77(November 1995a):946–51.CrossRefGoogle Scholar
Brown, A.B. “Rent Seeking Incentives in a Government Enforced Cartel: The U.S. Tobacco Program.” Unpub. paper, Dept. Agr. and Resour. Econ., North Carolina State University, 30 October 1995b.Google Scholar
Chaloupka, F. “Rational Addictive Behavior and Cigarette Smoking.” J. Polit. Econ. 99(August 1991):722–42.CrossRefGoogle Scholar
Clauson, A.L., and Grise, V.N.. “Flue-Cured Tobacco Farming: Two Decades of Change.” Agr. Econ. Rep. No. 692, USDA/Economic Research Service, Washington DC, 1994.Google Scholar
Fulginiti, L., and Perrin, R.. “The Theory and Measurement of Producer Response Under Quotas.” Rev. Econ. and Statis. 75(1993):97–106.CrossRefGoogle Scholar
Goodwin, B.K., and Sumner, D.A.. “Estimation of Market Supply Parameters Under Mandatory Production Quotas.” Unpub. paper, Dept. Agr. and Resour. Econ., North Carolina State University, December 1992.Google Scholar
Johnson, P.R., and Norton, D.T.. “Social Cost of the Tobacco Program Redux.” Amer. J. Agr. Econ. 65(February 1983):117–19.CrossRefGoogle Scholar
Rezitis, A.N., Foster, W.E., and Brown, A.B.. “Adjustment Costs and Dynamic Factor Demands for U.S. Cigarette Manufacturing.” Unpub. paper, Dept. Agr. and Resour. Econ., North Carolina State University, 5 December 1995.Google Scholar
Rucker, R.R., Thurman, W.N., and Sumner, D.A.. “Restricting the Market for Quota: An Analysis of Tobacco Production Rights with Corroboration from Congressional Testimony.” J. Polit. Econ. 103(1995):142–75.CrossRefGoogle Scholar
U.S. Department of Agriculture. Tobacco Situation and Outlook Report. USDA/Economic Research Service, Washington DC. Various issues, 1992-1995.Google Scholar
Wasserman, J., Manning, W.G., Newhouse, J.R., and Winkler, J.D.. “The Effects of Excise Taxes and Regulations on Cigarette Smoking.” J. Health Econ. 10(January 1991):43–64.CrossRefGoogle ScholarPubMed
Zaini, H., Beghin, J., and Brown, A.B.. “Impact of Domestic Content Requirement on the U.S. Tobacco and Cigarette Industries.” Agr. Econ. (1996, forthcoming).Google Scholar