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Demand For E-Cigarettes Based On Nicotine Strength: Evidence From Retail Sales

Author

Listed:
  • Megan C. Diaz
  • Adrian Bertrand
  • Tatum McKay
  • Barbara A. Schillo
  • Bushraa S. Khatib
  • John A. Tauras

Abstract

Using NielsenIQ Retail Scanner data, we estimate demand equations for e-cigarettes by nicotine concentration. Overall, the models show that the price elasticities of demand range from -2.117 to -1.494. In a rapidly evolving e-cigarette market, demand for e-cigarettes varies considerably by nicotine strength. High-nicotine products, which have many close substitutes, are found to be more responsive to changes in price. Demand for low-nicotine products, with few close substitutes, are found to be less responsive to changes in price. Our findings also suggest that e-cigarettes with the lowest and highest nicotine concentrations may be economic complements, suggesting concurrent use. Unlike available evidence on cross-tax elasticities of demand, we find no evidence of an economic relationship between traditional cigarettes and e-cigarettes when broken down by nicotine strength concentration.

Suggested Citation

  • Megan C. Diaz & Adrian Bertrand & Tatum McKay & Barbara A. Schillo & Bushraa S. Khatib & John A. Tauras, 2024. "Demand For E-Cigarettes Based On Nicotine Strength: Evidence From Retail Sales," NBER Working Papers 32435, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32435
    Note: EH
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    More about this item

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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