In 1998, several states sued the major tobacco firms for failing to disclose the extent of health problems associated with

In 1998, several states sued the major tobacco firms for failing to disclose the extent of health problems associated with cigarette smoking. Ultimately, the major tobacco companies agreed to pay approximately $250 billion over a 25-year period to the states. The payments each tobacco firm made are proportional to the number of cigarettes each firm sells over that period; essentially a per unit tax on cigarettes. Why did the tobacco companies favor this type of settlement instead of having to pay a fixed amount per firm


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