Tobacco Outlook No. (TBS-250-01) 10 pp

November 2001

Trends in the Cigarette Industry After the Master Settlement Agreement

Since the Master Settlement Agreement (MSA) was signed in November 1998, the cigarette industry has been forced to raise prices to cover the costs associated with the settlement. The agreement between the attorneys general from 46 States and the major cigarette companies was intended primarily to reimburse States for expenses related to the treatment of smoking-related illnesses. Cigarette companies have boosted prices as a result of payments required by the settlement. Higher prices have curtailed consumption, although not as much as originally expected. The long-term decline in cigarette consumption due to non-economic factors continues as well.

Keywords: cigarettes, tobacco, consumption, supply, use, taxes, Master Settlement Agreement, Consumer Price Index, imports, and exports

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