Bootleggers, Baptists, and Televangelists

Abstract:     
The 1998 Master Settlement Agreement between tobacco manufacturers and the attorneys general of 46 states substituted a private agreement for the normal processes of regulation and taxation. They dramatically reduced the public's opportunity to participate in both and to hold accountable those responsible for regulatory burdens and tax increases. The MSA was the product of more than the standard "bootleggers and Baptists" dynamics that often propel regulation. The MSA represented the arrival of a new player that can euphemistically be called the "televangelist" - superstar class-action law firms that initially side with the "Baptists" but whose ultimate goal is a settlement that will deliver them enormous fees and political power.

Keywords: regulation, taxation, tax, barriers, barriers to entry, public choice, public interest, smoking, cigarettes, regulatory authority, tabacco, bootlegger, assumption-of-risk defense

JEL Classifications: D4, D43, H1, H10, H11, H2, H20, H25, I1, I18, K1, K13, K2, K20, K23, K3, K32, L6, L66

Accepted Paper Series