Tobacco price elasticity in Serbia: evidence from a middle-income country with high prevalence and low tobacco prices

Vladisavljević, Marko and Zubović, Jovan and Đukić, Mihajlo and Jovanović, Olivera (2020) Tobacco price elasticity in Serbia: evidence from a middle-income country with high prevalence and low tobacco prices. Tobacco control, 29 (5). pp. 331-336. ISSN 0964-4563

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Abstract

In this paper, we use Deaton’s demand model and
Household Budget Survey data from 2006 to 2017 to
provide a first robust and reliable estimate of cigarettes
price elasticity for Serbia. The case of Serbia is particularly
interesting and important as it provides evidence for
a country in which tobacco market is characterised by
the high tobacco consumption, low prices and large
perceived impact of multinational tobacco companies
on public revenues, export and employment, given their
considerable cigarette production in Serbia. The price
elasticity of cigarettes is estimated at −0.639, in line
with the previous estimates for the low-income and
middle-income countries. Estimated negative cigarettes
price elasticity for Serbia suggests that tobacco tax
policy could be used effectively to reduce cigarette
consumption in Serbia, which could lower the harmful
health effects of cigarettes. Furthermore, a calculation
based on the estimated elasticity suggests that
increasing tobacco taxes could also have positive fiscal
effects, as the expected revenue from the taxes would
increase.

Item Type:	Article
Additional Information:	COBISS.ID=26308873
Research Department:	Welfare Economics
Depositing User:	Jelena Banovic
Date Deposited:	24 Nov 2020 10:34
Last Modified:	24 Nov 2020 10:34
URI:	http://35.240.28.64/id/eprint/1512
Author Links:	[error in script] No links available.

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