Oligopoly Structure and the Incidence of Cigarette Excise Taxes
AbstractThe economic incidence of cigarette excise taxes in the United States is estimated for 1955-1989. The analysis simultaneously considers consumer demand and the reactions of manufacturers and the distribution industry, and contrasts the incidence of federal with state and local taxes. A cost function was estimated, and found that cigarette manufacture is subject to increasing returns to scale. The model of the market found a mean price elasticity of demand of -1.08. Price elasticity has been decreasing. The elimination of simultaneity bias may explain why this estimate is higher than that of other studies. The industry was found to be less competitive than a Cournot industry. Competition among manufacturers has decreased substantially since 1980. This may be because manufacturers have become less concerned about anti-trust scrutiny or the prospect of new competitors. A simulation shows that an increase in the federal excise tax causes a greater increase in price, and a greater decrease in consumption, than does the same increase in the average of state and local tax rates. This is consistent with the view that in the face of an increase in a state or local tax, some demand shifts to neighboring jurisdictions with lower taxes.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by University of California at Berkeley in its series Economics Working Papers with number 92-202.
Date of creation: 01 Sep 1992
Date of revision:
Contact details of provider:
Postal: University of California at Berkeley, Berkeley, CA USA
Web page: http://www.haas.berkeley.edu/groups/iber/wps/econwp.html
More information through EDIRC
Postal: IBER, F502 Haas Building, University of California, Berkeley CA 94720-1922
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Hai-Yen Sung & Teh- Wei Hu & Theodore E. Keeler, 1994. "A Dynamic Simultaneous-Equations Model for Cigarette Consumption in the Western States," Public Economics 9403002, EconWPA, revised 04 Apr 1994.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum).
If references are entirely missing, you can add them using this form.