The U.S. Tobacco Buyout: A Partial and General Equilibrium Analysis

This article analyzes the impact of removing the U.S. tobacco program in both a partial and general welfare economics framework. In a partial-equilibrium framework, a consumer taxfunded quota buyout can result in producer gains, consumer losses, net losses resulting from higher prices, and deadweight losses. In a general-equilibrium framework, society can gain from the buyout resulting from considerable potential savings from reduced healthcare costs attributable to a reduction in smoking. Additionally, we present a model that addresses the addictive qualities of tobacco while considering the effects of the quota buyout. We also conclude that another possible effect of the buyout is an increase in worker productivity because employees who are able to quit smoking reduce the amount of smoking-related sick days taken.

Bosch, Darrell J.
Marchant, Mary A.
Wetzstein, Michael
Issue Date:
Aug 01 2013
Publication Type:
Journal Article
PURL Identifier:
Published in:
Journal of Agricultural and Applied Economics, Volume 45
Page range:
Total Pages:
JEL Codes:
I10; J20; Q00; Q11; Q18
Series Statement:
Volume 45
Number 3

 Record created 2017-04-01, last modified 2018-01-22

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