Tobacco Regulation

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Tobacco Regulation

The U.S. government regulates the sale and distribution of tobacco products in many ways. Some examples of the way the government regulates are setting an age limit and taxing tobacco products. In the economic world, the tobacco wars are a serious issue. The sale of tobacco as we know is very inelastic.

The government puts heavy taxes on tobacco products to cut down on the sale of them. They know that the people will buy cigarettes no matter how much they cost. Elasticity has a lot to do with the taxation of cigarettes. The relatively low price elasticity of demand in the tobacco market results in higher tax revenues than in any other type of market. The government knows that the demand of tobacco is high enough that they can apply these stiff taxes. Cigarette taxes work as a steady source of revenue for the government. There will be some people that will stop smoking, but there will always be those people that will not. The demand will always still be there unlike other market products.

Another reason why the government wants to regulate the sale...

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