Price Elasticity Estimates of Cigarette Demand in Vietnam
AbstractIn 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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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 12779.
Date of creation: Sep 2001
Date of revision: Nov 2007
Price elasticity; Cigarette Demand; Taxation; Consumption; Vietnam;
Other versions of this item:
- Patrick Eozenou & Burke Fishburn, 2009. "Price Elasticity Estimates for Cigarette Demand in Vietnam," Working Papers 05, Development and Policies Research Center (DEPOCEN), Vietnam.
- I12 - Health, Education, and Welfare - - Health - - - Health Production
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
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