PAM_4380_april_11_2011 - Litigation 4/11/2011 Master...

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Litigation 4/11/2011 Master Settlement Agreement Structure of cigarette industry (Bulow & Klemperer) Impact of MSA on cigarette industry Impact of MSA funds Political theory Homework #6 due Monday, April 18 Obesity Lawsuits (probably next week) Prelim #2: Friday, April 22
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1998 Master Settlement Agreement A. Could you please explain the recent historic tobacco settlement? B. Sure. Basically, the tobacco industry has admitted that it is killing people by the millions, and has agreed that from now on it will do this under the strict supervision of the federal government. Dave Barry
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MSA , cont. Industry separately settled 4 Medicaid cases Mississippi: $3 billion, over 25 years Florida: $11 billion Texas: $14 billion Minnesota: $6 billion November 1998 announce settlement that covered remaining states Industry pays states $208 billion over 25 years On same day, major tobacco companies ↑ wholesale price of cigarettes by $0.45/ pack Plaintiffs’ attorneys’ fees not public, but estimated around $18 - $38 billion $1000s/ hour worked
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Cui bono fuerit? Industry pays states $242 billion over 25 years Plaintiffs’ attorneys’ fees estimated around $18 - $38 billion Industry raises wholesale price of cigarettes by $0.45/ pack Estimates this will at least cover payments to states
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This note was uploaded on 04/28/2011 for the course PAM 4380 taught by Professor Kenkel during the Spring '08 term at Cornell University (Engineering School).

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PAM_4380_april_11_2011 - Litigation 4/11/2011 Master...

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