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Quasi-Experimental Price Elasticities of Cigarette Demand and the Bootlegging Effect

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  • Badi H. Baltagi
  • Rajeev K. Goel

Abstract

This paper updates the Lyon and Simon quasi-experimental price elasticities of cigarette demand and studies their sensitivity to changes in the cigarette market over time as well as their sensitivity to the effects of bootlegging. The results indicate a downward trend in these elasticities over time and an upward bias for states where bootlegging exists. However, once the comparison group is modified to include bootlegging-free states only, this difference over time and across groups becomes statistically insignificant.

Suggested Citation

  • Badi H. Baltagi & Rajeev K. Goel, 1987. "Quasi-Experimental Price Elasticities of Cigarette Demand and the Bootlegging Effect," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 69(4), pages 750-754.
  • Handle: RePEc:oup:ajagec:v:69:y:1987:i:4:p:750-754.
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    File URL: http://hdl.handle.net/10.2307/1242184
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    References listed on IDEAS

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    1. Ronald I. McKinnon, 1967. "Futures Markets, Buffer Stocks, and Income Stability for Primary Producers," Journal of Political Economy, University of Chicago Press, vol. 75, pages 844-844.
    2. Marcus, Alan J & Modest, David M, 1984. "Futures Markets and Production Decisions," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 409-426, June.
    3. Just, Richard E. & Pope, Rulon D., 1978. "Stochastic specification of production functions and economic implications," Journal of Econometrics, Elsevier, vol. 7(1), pages 67-86, February.
    4. Cox, John C. & Ingersoll, Jonathan Jr. & Ross, Stephen A., 1981. "The relation between forward prices and futures prices," Journal of Financial Economics, Elsevier, vol. 9(4), pages 321-346, December.
    5. Gershon Feder & Richard E. Just & Andrew Schmitz, 1980. "Futures Markets and the Theory of the Firm under Price Uncertainty," The Quarterly Journal of Economics, Oxford University Press, vol. 94(2), pages 317-328.
    6. Danthine, Jean-Pierre, 1978. "Information, futures prices, and stabilizing speculation," Journal of Economic Theory, Elsevier, vol. 17(1), pages 79-98, February.
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    Citations

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    Cited by:

    1. Celidoni, Martina & Pieroni, Luca & Salmasi, Luca, 2014. "Side-effects of anti-smoking policies on health behaviors. Evidence from the US," MPRA Paper 58312, University Library of Munich, Germany.
    2. Escañuela Romana, Ignacio, 2018. "La elasticidad precio de la demanda de transporte aéreo de pasajeros en los Estados Unidos
      [The price elasticity of demand for air travel in the United States]
      ," MPRA Paper 83572, University Library of Munich, Germany.
    3. Badi Baltagi & Rajeev Goel, 2004. "State tax changes and quasi-experimental price elasticities of U.S. cigarette demand: An update," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 28(3), pages 422-429, September.
    4. Marie Thursby & Richard Jensen & Jerry Thursby, 1991. "Smuggling, Camouflaging, and Market Structure," The Quarterly Journal of Economics, Oxford University Press, vol. 106(3), pages 789-814.
    5. Marie C. Thursby & Jerry G. Thursby, 1994. "Interstate Cigarette Bootlegging: Extent, Revenue Losses, and Effects of Government Intervention," NBER Working Papers 4763, National Bureau of Economic Research, Inc.
    6. repec:eee:pubeco:v:150:y:2017:i:c:p:53-74 is not listed on IDEAS
    7. Thursby, Jerry G. & Thursby, Marie C., 2000. "Interstate Cigarette Bootlegging: Extent, Revenue Losses, and Effects of Federal Intervention," National Tax Journal, National Tax Association, vol. 53(1), pages 59-78, March.
    8. Thursby, Jerry G. & Thursby, Marie C., 2000. "Interstate Cigarette Bootlegging: Extent, Revenue Losses, and Effects of Federal Intervention," National Tax Journal, National Tax Association, vol. 53(n. 1), pages 59-78, March.
    9. Benjamin, Daniel K & Dougan, William R, 1997. "Efficient Excise Taxation: The Evidence from Cigarettes," Journal of Law and Economics, University of Chicago Press, vol. 40(1), pages 113-136, April.
    10. Stehr, Mark, 2005. "Cigarette tax avoidance and evasion," Journal of Health Economics, Elsevier, vol. 24(2), pages 277-297, March.

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