Abstract

http://ssrn.com/abstract=1783032
 
 

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Regulation, Taxation, and Litigation


W. Kip Viscusi


Vanderbilt University - Law School; National Bureau of Economic Research (NBER); Vanderbilt University - Department of Economics; Vanderbilt University - Owen Graduate School of Management; Vanderbilt University - Strategy and Business Economics

March 10, 2011

Vanderbilt Law and Economics Research Paper No. 11-12
Vanderbilt Public Law Research Paper No. 12-24

Abstract:     
Policy tools that potentially foster efficient levels of health and safety are regulation, litigation, and taxation. Most U.S. regulatory agencies set standards that are more stringent than the efficient level of safety. As a result, there is strong justification for a regulatory compliance defense when companies are in compliance with specific regulations. Given the recent U.S. Supreme Court ruling in Wyeth v. Levine, legislation would be needed to establish a meaningful defense. Tort litigation on behalf of government entities may lead to settlements that do not involve conventional damages payments but rather impose both regulation and taxation. The Master Settlement Agreement for the cigarette litigation included regulatory components that had potentially anti-competitive effects. It also imposed an excise tax equivalent of 40 cents per pack that is prospective and will affect all firms, including those that have exhibited no wrongful conduct. New entrants and smokers were excluded from the negotiations, which generated disproportionate financial benefits to some states. The use of litigation to impose regulations and taxation should be discouraged.

Number of Pages in PDF File: 24

Keywords: regulation, litigation, master settlement agreement, regulatory compliance defense, cigarettes

JEL Classification: I18, K32, K13, K10

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Date posted: March 13, 2011 ; Last revised: November 27, 2012

Suggested Citation

Viscusi, W. Kip, Regulation, Taxation, and Litigation (March 10, 2011). Vanderbilt Law and Economics Research Paper No. 11-12; Vanderbilt Public Law Research Paper No. 12-24. Available at SSRN: http://ssrn.com/abstract=1783032 or http://dx.doi.org/10.2139/ssrn.1783032

Contact Information

W. Kip Viscusi (Contact Author)
Vanderbilt University - Law School ( email )
131 21st Avenue South
Nashville, TN 37203-1181
United States
615-343-7715 (Phone)
615-322-5953 (Fax)
HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Vanderbilt University - Department of Economics
Box 1819 Station B
Nashville, TN 37235
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)
HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm
Vanderbilt University - Owen Graduate School of Management
401 21st Avenue South
Nashville, TN 37203
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)
HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm
Vanderbilt University - Strategy and Business Economics ( email )
Nashville, TN 37203
United States

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