State Tax Changes and Quasi-Experimental Price Elasticities of U.S. Cigarette Demand: An Update
Journal of Economics and Finance, vol. 28, no. 3, pp. 422-429
Posted: 6 Apr 2016
Date Written: 2004
This paper uses 336 state tax changes across the U.S. spanning 42 years (1956–1997) to provide an updated look at the quasi-experimental price elasticities of cigarette demand. It also studies the sensitivity of these elasticity estimates to changes in the cigarette market over time as well as their sensitivity to border-effect purchases. Besides replicating earlier findings, the results show a downward trend in these elasticities over time and sensitivity to border effect purchases. Policy implications are discussed.
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