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107 Yale L.J. [xxi] (1997-1998)
Article Abstract - Issue 5

handle is hein.journals/ylr107 and id is 21 raw text is: The Yale Law Journal Volume 107, Number 5, March 1998 Article Abstract The Costs of Cigarettes: The Economic Case for Ex Post Incentive-Based Regulation Jon D. Hanson & Kyle D. Logue 1163 Critics of the tobacco industrn and public health advocates have long argued that the market for cigarettes should be more strictly regulated. Recent events suggest that those admonitions are not going unheeded. Nevertheless, many market-oriented policy analysts and efficienc'-minded legal scholars have concluded that fitrther regulation of the cigarette market is unjustified, for two general reasons: First, smokers already understand the risks of smoking; and second, any negative spullover effects of smoking are matched, if not exceeded, by positive spillover effects. In this Article, Professors Hanson and Logue use a market- oriented approach to challenge the conclusion that the cigarette market functions well. They argue that consumners are not adequately' informed of the risks of smoking, that the benefits of smiokers earl) deaths have been miscalculated, and that those benefits should not in any case figure in the question of whether deterrence-based regulation is appropriate. After concluding that effective regulation of the market for cigarettes is long overdue, Professors Hanson and Logue explain that one particular form of regulation-ex post incentive-based regulation-is likely to be especially effective in addressing the relevant sources of market failure. They then sketch what such a regulator' regime might look like. specifically suggesting a smokers compensation system modeled loosely on state workers' cotnpensation programs. Finally. the' criticize the proposed national tobacco settlement for relyimg on the wrong sort of regulatory devices and for virtuallh' eliminating tort lt; the only potential source of ex post imcentive-based regulation now available.

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