What Price is Right? Cigarette Demand Has Become More Responsive to Prices

Gafarov, Bulat, Tengda Gong and Jens Hilscher

from ARE Update Vol. 25, No. 4, Mar/Apr, 2022

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Abstract

We provide evidence that demand for cigarettes has become relatively more sensitive to price changes, while other products’ demand has become slightly less responsive. This change happened during a time of high cigarette taxes, increased regulation of smoking, and is particularly pronounced in California.

Keywords

demand elasticity, market power, spatial competition, markups

Citation

Gafarov, Bulat, Tengda Gong and Jens Hilscher. 2022. "What Price is Right? Cigarette Demand Has Become More Responsive to Prices." ARE Update 25(4): 9-11. University of California Giannini Foundation of Agricultural Economics.
https://giannini.ucop.edu/filer/file/1650925435/20369/