How do prices of manufactured cigarettes and roll-your-own tobacco affect demand for these products? Tobacco price elasticity in Western Balkan countries

Vladisavljević, Marko and Đukić, Mihajlo and Jovanović, Olivera and Zubović, Jovan (2022) How do prices of manufactured cigarettes and roll-your-own tobacco affect demand for these products? Tobacco price elasticity in Western Balkan countries. Tobacco Control. ISSN 0964-4563

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Abstract

Background and objective
Numerous studies have
indicated that tobacco taxation is one of the most
important policies to reduce tobacco consumption.
However, its effectiveness crucially depends on consumer
responses to price increases, that is, tobacco price
elasticities. This paper analyses tobacco price elasticity in
six Western Balkan countries.
Data and methods We estimate own-price and crossprice elasticities of manufactured cigarettes (MCs) and
roll-your-own (RYO) tobacco by using the methodological
framework of the two-part model, regional variation
in prices and 2019 Survey on Tobacco Consumption in
Southeastern European countries (STC-SEE). STC-SEE
provides a uniquely comparable nationally representative
data on smoking behaviour for adult (18–85 years old)
population for each country.
Results Results suggest that higher prices of MCs
are associated with lower prevalence of MC use, while
higher prices of RYO are associated with lower intensity
of RYO use. Furthermore, regions with higher MC
prices have a higher likelihood of using RYO over MC,
suggesting that RYO is used as a cheaper alternative to
MC. Lastly, lower smoking prevalence and intensity are
associated with more smoking restrictions and support
for tobacco price increases.
Conclusion Results suggest that, aiming to decrease
smoking prevalence and intensity, governments should
increase excises on all tobacco products. Since RYO is
a cheaper alternative to MC, the increase of excises on
RYO should be higher, so that after excise increase, the
prices of the two products are approximately the same.
To further reduce tobacco consumption, governments
should combine increasing taxes on tobacco products
with non-price measures, such as stricter smoking
restrictions and smoke-free regulations.

Item Type:	Article
Research Department:	Welfare Economics
Depositing User:	Jelena Banovic
Date Deposited:	01 Mar 2022 08:52
Last Modified:	01 Mar 2022 08:52
URI:	http://35.240.28.64/id/eprint/1748
Author Links:	[error in script] No links available.

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