Prices will pick up the slack. In fact, the settlement proposal envisions an antitrust exemption to allow companies to raise prices jointly. Both Dr. Harris and W. Kip Viscusi, a Harvard Law School economist and expert witness for the tobacco industry, believe the price of a pack of cigarettes will rise 62 cents on average within five years to provide the companies with enough revenue to pay off the plaintiffs. That's assuming cigarettes cover the whole amount. If smokeless-tobacco prices also rise, cigarettes could go up a little less than 60 cents a pack.
Penalties seem survivable now.
Teenagers are about three times as sensitive as adults to cigarette price boosts, Prof. Chaloupka says. Possible penalties could change. The horizon would clear. The settlement would simultaneously settle suits by 40 states that claim the industry should pay for tobacco-related Medicaid costs. It also would provide broad liability protection against future lawsuits.