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The Gradual Response of Cigarette Demand to Health Information

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  • Gallet, Craig
  • Agarwal, Rajshree

Abstract

The paper focuses on the US cigarette industry and uses a gradual switching regression model to estimate changes in the US demand for cigarettes over time. This technique is found to be superior to the use of dummy variables in capturing the health scare. The results show that cigarette demand gradually decreased over a ten-year period coinciding with the release of key health information. Price and advertising elasticities have gradually diminished, which is consistent with a change in the mix of US consumers before and after the switch. Copyright 1999 by Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research

Suggested Citation

  • Gallet, Craig & Agarwal, Rajshree, 1999. "The Gradual Response of Cigarette Demand to Health Information," Bulletin of Economic Research, Wiley Blackwell, vol. 51(3), pages 259-265, July.
  • Handle: RePEc:bla:buecrs:v:51:y:1999:i:3:p:259-65
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    1. Ruth N. Bolton & Randall G. Chapman, 2008. "Searching For Positive Returns At The Track: A Multinomial Logit Model For Handicapping Horse Races," World Scientific Book Chapters,in: Efficiency Of Racetrack Betting Markets, chapter 17, pages 151-171 World Scientific Publishing Co. Pte. Ltd..
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    7. Ron Bird & Michael McCrae, 1987. "Tests of the Efficiency of Racetrack Betting Using Bookmaker Odds," Management Science, INFORMS, vol. 33(12), pages 1552-1562, December.
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    Cited by:

    1. Clark, Andrew & Etile, Fabrice, 2002. "Do health changes affect smoking? Evidence from British panel data," Journal of Health Economics, Elsevier, vol. 21(4), pages 533-562, July.
    2. John Schroeter & Aju Fenn, 2005. "Structural change in cigarette demand: cusum tests using panel data," Economics Bulletin, AccessEcon, vol. 9(8), pages 1-11.
    3. repec:ebl:ecbull:v:9:y:2005:i:8:p:1-11 is not listed on IDEAS
    4. Aju Fenn & John Schroeter, 2004. "Cigarettes and addiction information: simulating the demand effects of the tobacco industry's 'conspiracy of silence'," Applied Economics, Taylor & Francis Journals, vol. 36(19), pages 2151-2159.

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