Smoking Restrictions and Spillover Across Jurisdictions

Abstract

We use state-level data to estimate the demand for cigarettes and the determinants of smoking prevalence in the United States. The main contribution lies in considering spillovers from geographic smoking restrictions. Results show that price affects cigarette demand, but not smoking prevalence. Cigarette demand turns out be unit elastic and similar in magnitude to the border-price elasticity. Home-based smoking restrictions lower both cigarette demand and participation, while work restrictions only lower participation. Border home restrictions seem inconsequential, whereas border work restrictions have a marginally positive effect, especially on cigarette demand. Policy implications are discussed.