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Cigarette advertising and U.S. cigarette demand: A policy assessment

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  • Goel, Rajeev K.

Abstract

The effect of advertising on cigarette demand has been widely studied. Yet the demand-advertising nexus is not completely understood and there is little consensus in the literature. This paper sheds new light on the issue by examining the relationship using state-level data for the United States over three decades. Additional contributions include examining the effects of the Master Settlement Agreement, and studying the dynamic effects of advertising and smoking. Findings show that U.S. cigarette demand is inelastic, the income effects are mixed, advertising elasticities are relatively small, post-MSA advertising seems smoking-reducing and that the full effects of the MSA are probably still unfolding. Smoking habits tend to linger, while the effects of antismoking messages accompanying cigarette advertisements take time to be effective. Policy implications are discussed.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Policy Modeling.

Volume (Year): 31 (2009)
Issue (Month): 3 (May)
Pages: 351-357

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Handle: RePEc:eee:jpolmo:v:31:y:2009:i:3:p:351-357

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Web page: http://www.elsevier.com/locate/inca/505735

Related research

Keywords: Cigarette advertising Demand Elasticities Master Settlement Agreement;

References

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  1. Rajeev K. Goel & Michael A. Nelson, 2006. "The Effectiveness of Anti-Smoking Legislation: A Review," Journal of Economic Surveys, Wiley Blackwell, vol. 20(3), pages 325-355, 07.
  2. Craig A. Gallet & John A. List, 2003. "Cigarette demand: a meta-analysis of elasticities," Health Economics, John Wiley & Sons, Ltd., vol. 12(10), pages 821-835.
  3. Duffy, Martyn, 1995. "Advertising in demand systems for alcoholic drinks and tobacco: A comparative study," Journal of Policy Modeling, Elsevier, vol. 17(6), pages 557-577, December.
  4. Khosrow Doroodian & Barry J. Seldon, 1991. "Advertising and Cigarette Consumption," Eastern Economic Journal, Eastern Economic Association, vol. 17(3), pages 359-366, Jul-Sep.
  5. Baltagi, Badi H & Levin, Dan, 1986. "Estimating Dynamic Demand for Cigarettes Using Panel Data: The Effects of Bootlegging, Taxation and Advertising Reconsidered," The Review of Economics and Statistics, MIT Press, vol. 68(1), pages 148-55, February.
  6. Saffer, Henry & Chaloupka, Frank, 2000. "The effect of tobacco advertising bans on tobacco consumption," Journal of Health Economics, Elsevier, vol. 19(6), pages 1117-1137, November.
  7. Frank J. Chaloupka & Kenneth E. Warner, 1999. "The Economics of Smoking," NBER Working Papers 7047, National Bureau of Economic Research, Inc.
  8. Goel, Rajeev K. & Nelson, Michael A., 2007. "The Master Settlement Agreement and cigarette tax policy," Journal of Policy Modeling, Elsevier, vol. 29(3), pages 431-438.
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Cited by:
  1. Bilgic, Abdulbaki & Florkowski, Wojciech J. & Yen, Steven T. & Akbay, Cuma, 2013. "Tobacco spending patterns and their health-related implications in Turkey," Journal of Policy Modeling, Elsevier, vol. 35(1), pages 1-15.
  2. Richard Cebula & Maggie Foley & Robert Houmes, 2014. "Empirical analysis of the impact of cigarette excise taxes on cigarette consumption: estimates from recent state-level data," Journal of Economics and Finance, Springer, vol. 38(1), pages 164-180, January.

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