Economic Welfare Effects of the FDA Regulation of Tobacco Products on Tobacco Growers
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The Family Smoking Prevention and Tobacco Control Act of 2009 (FSPTCA) became federal law on June 22, 2009, authorizing the U.S. Food and Drug Administration (FDA) to regulate the manufacturing and marketing of tobacco products in the country. This study examines the potential economic welfare implications for tobacco farms using the Equilibrium Displacement Model. Results suggest that the FDA regulation of tobacco products could induce a significant fall in domestic cigarette sales, leading to a significant loss in tobacco revenue and economic benefits. Therefore, despite the fact that tobacco growers are excluded from FDA authority in the FSPTCA of 2009, they are indirectly and adversely affected.