Cigarette Demand in Canada and the Us-Canadian Cigarette Smuggling

Applied Economics Letters, vol. 11, no. 9, pp. 537-540

Posted: 6 Apr 2016

See all articles by Rajeev K. Goel

Rajeev K. Goel

Illinois State University - Department of Economics

Date Written: 2004

Abstract

Using annual data from Canadian provinces, this paper studies the effects of a drastic reduction in Canadian cigarette taxes in 1994 on cross-border smuggling. The results show that the policy was successful in that the border prices seem to not have had a statistically significant impact on cigarette sales. The own price elasticity of cigarette demand in Canada is estimated to be around -0.7. The elasticity is slightly lower when the border-price effects are taken into account and is larger than the corresponding estimates for the USA, implying that dollar-for-dollar there might be greater opportunities for reducing smoking in Canada through higher taxes than the USA.

Suggested Citation

Goel, Rajeev K., Cigarette Demand in Canada and the Us-Canadian Cigarette Smuggling (2004). Applied Economics Letters, vol. 11, no. 9, pp. 537-540. Available at SSRN: https://ssrn.com/abstract=2758980

Rajeev K. Goel (Contact Author)

Illinois State University - Department of Economics ( email )

Normal, IL 61790-4200
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
603
PlumX Metrics