--- john hull <[EMAIL PROTECTED]> wrote:

> ... assuming that cigarette companies
> are (and have been) profit maximizers, can lump-sum
> lawsuit settlement offer incentive for cigarette
> companies to change their prices?  

Standard economic theory says no.  A lump-sum payment does not affect the
marginal cost of producing cigarettes, so the supply is unchanged, and the
demand is the same, so the market price determined by supply and demand
should not change.

Fred Foldvary

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[EMAIL PROTECTED]

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