Enforcing the Law Against Illicit Traffic in Tobacco Products: Organizational Problems and Potential Solutions

15 Pages Posted: 31 Aug 2017 Last revised: 6 Sep 2017

See all articles by Mark A.R. Kleiman

Mark A.R. Kleiman

BOTEC Analysis, LLC; New York University Marron Institute of Urban Management

Michael L DeFeo

BOTEC Analysis, LLC

Date Written: August 23, 2017

Abstract

The illicit trade in tobacco products (ITTP) is substantial and growing. The federal government does not now have adequate capacity to control ITTP. Other urgent priorities have compelled the Bureau of Alcohol, Tobacco, Firearms, and Explosives (BATFE) to substantially abandon its tobacco enforcement efforts. The potential gains from ITTP activity are high and unlikely to decrease under any currently probable scenario, while the enforcement risks are modest. That combination predicts continued growth in ITTP levels. The resources required to bring any illicit market under control are roughly proportional to the size of the market. Thus, current neglect increases the future difficulty of the problem.

There are several options for improving the effectiveness of enforcement at the federal level, with minimal budgetary implications. There is a strong ethical and business case for cooperation with such efforts on the part of firms in the (licit) industry, and good reasons for public enforcement agencies to accept such assistance.

Keywords: ITTP, tobacco, enforcement, taxes

JEL Classification: K42, I18, H26, H21, H71

Suggested Citation

Kleiman, Mark A.R. and DeFeo, Michael L, Enforcing the Law Against Illicit Traffic in Tobacco Products: Organizational Problems and Potential Solutions (August 23, 2017). Available at SSRN: https://ssrn.com/abstract=3025138 or http://dx.doi.org/10.2139/ssrn.3025138

Mark A.R. Kleiman (Contact Author)

BOTEC Analysis, LLC ( email )

322 N. Mansfield Avenue
Los Angeles, CA 90036

New York University Marron Institute of Urban Management ( email )

196 Mercer St.
New York, NY 10012
United States

Michael L DeFeo

BOTEC Analysis, LLC ( email )

322 N. Mansfield Avenue
Los Angeles, CA 90036

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