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It shows that government grabs a share of private output when a tax is imposed, thus reducing the benefits to buyers (consumer surplus) and sellers (producer surplus)

Flavored Tobacco at the Federal Level Due to the Family Smoking Prevention and Tobacco Control Act of 2009, retailers can no longer sell cigarettes containing flavors other than menthol in the United States

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As such, we use the residual (unexplained sales) from the aforementioned regression as the dependent variable in a second regression which includes tax differentials and other common variables to explain the level of casual and commercial smuggling