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Price Elasticity Estimates for Cigarette Demand in Vietnam

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Author Info
Patrick Eozenou () (European University Institute, Villa San Paolo, Via Della Piazzuola 43, 50133 Florence, Italy)
Burke Fishburn (World Health Organization and Center for Disease Control.)

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Abstract

In this paper, we analyze a complete demand system to estimate the price elasticity for cigarette demand in Vietnam. Following Deaton (1990), we build a spatial panel using cross sectional household survey data. We consider a model of simultaneous choice of quantity and quality. This allows us to exploit unit values from cigarette consumption in order to disentangle quality choice from exogenous price variations. We then rely on spatial variations in prices and quantities demanded to estimate an Almost Ideal Demand System. The estimated price elasticity for cigarette demand is centered around -0.53, which is in line with previous empirical studies for developing countries.

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Publisher Info
Paper provided by Development and Policies Research Center (DEPOCEN), Vietnam in its series Working Papers with number 05.

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Length: 27 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:dpc:wpaper:0509

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Related research
Keywords: Price elasticity; Cigarette Demand; Taxation; Consumption; Vietnam.;

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Find related papers by JEL classification:
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
I12 - Health, Education, and Welfare - - Health - - - Health Production
O23 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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References listed on IDEAS
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  1. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1975. "Transcendental Logarithmic Utility Functions," American Economic Review, American Economic Association, vol. 65(3), pages 367-83, June. [Downloadable!] (restricted)
  2. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June. [Downloadable!] (restricted)
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This page was last updated on 2009-11-18.

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