Economics Perspectives Sample Clauses

Economics Perspectives. Xxxxxxxx Xxxxxxxxx and Xxxxxxx X. Xxxxxxxx conducted an empirical study of the MSA’s impact on the na- ture of competition in the cigarette industry.135 They found that the MSA payments effectively raised the federal per-pack tax on cigarettes by $0.44, but that cigarette firms raised prices by more than $1 in the first few years following the agreement.136 They explain this difference by showing that the MSA provided an opportunity for cigarette firms to agree to collectively raise prices.137 Xxx Xxxxx described the MSA as a “legal innovation in cartelization technology.”138 By “[m]aking damages contingent on future quantities sold,” the MSA increases the “manufacturers’ marginal cost and there- fore can predictably increase the price toward the monopoly level.”139 Further, by “[e]xempting a certain number of units produced (the ‘off- set’ amount) from the damage calculation,” the MSA enables the state to share the cartel profits with cigarette manufacturers.140 To Xxxxx, the bot- xxx line was that the MSA would anticompetitively raise market prices toward the monopoly level and deter new entry.141
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