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Cigarette Tax Revenues and Tobacco Control in Japan

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  • Junmin Wan

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    (Osaka School of International Public Policy, Osaka University)

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    Abstract

    The hypotheses of non-addiction, myopia and rational addiction are tested using annual, quarterly and monthly data. Changes in the prices of Japanese cigarettes can be viewed as exogenous from the point of view of consumer behavior, because the Japanese government controls cigarette prices. The empirical results of this paper support the addiction hypothesis. The short-run and long-run price elasticities range from -0.338 to -0.421, and from -0.679 to -0.686, respectively; thus, increases in tax revenues in the long-run are likely to be smaller than those in the short-run. As a result, tax increases would be an effective means of curbing smoking and reducing its social cost. Furthermore, the debt compensation programs for the Japan Railway and the National Forestry will not go according to plan, unless revenues are increased in the future.

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    File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/0411R.pdf
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    Bibliographic Info

    Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 04-11-Rev.

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    Length: 33 pages
    Date of creation: Jun 2004
    Date of revision: Feb 2006
    Publication status: Forthcoming in Applied Economics
    Handle: RePEc:osk:wpaper:0411r

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    Web page: http://www.econ.osaka-u.ac.jp/
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    Keywords: smoking; rational addiction; tax revenues;

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    1. Jose Julian Escario & Jose Alberto Molina, 2001. "Testing for the rational addiction hypothesis in Spanish tobacco consumption," Applied Economics Letters, Taylor & Francis Journals, vol. 8(4), pages 211-215.
    2. Auld, M. Christopher & Grootendorst, Paul, 2004. "An empirical analysis of milk addiction," Journal of Health Economics, Elsevier, vol. 23(6), pages 1117-1133, November.
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    5. Matthew C. Farrelly & William N. Evans & Edward Montgomery, 1999. "Do Workplace Smoking Bans Reduce Smoking?," American Economic Review, American Economic Association, vol. 89(4), pages 728-747, September.
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    7. Rajeev Goel, 2004. "Cigarette demand in Canada and the US-Canadian cigarette smuggling," Applied Economics Letters, Taylor & Francis Journals, vol. 11(9), pages 537-540.
    8. Bask, Mikael & Melkersson, Maria, 2001. "Rationally Addicted to Drinking and Smoking?," UmeÃ¥ Economic Studies 567, Umeå University, Department of Economics.
    9. Becker, Gary S & Grossman, Michael & Murphy, Kevin M, 1994. "An Empirical Analysis of Cigarette Addiction," American Economic Review, American Economic Association, vol. 84(3), pages 396-418, June.
    10. Chee-Ruey Hsieh, 1998. "Health risk and the decision to quit smoking," Applied Economics, Taylor & Francis Journals, vol. 30(6), pages 795-804.
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    Cited by:
    1. R. Duarte & J. Escario & J. Molina, 2014. "Are estimated peer effects on smoking robust? Evidence from adolescent students in Spain," Empirical Economics, Springer, vol. 46(3), pages 1167-1179, May.

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