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Modelling EU tobacco policy reform

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  • C. Stoforos
  • G. Mergos

Abstract

Smoking and tobacco use have acquired the dimensions of an epidemic. Recently, a decision by the European Parliament due to health concerns, calls for an elimination of production subsidies within five years. The purpose of this paper is to estimate the economic implications of the reduction of protection levels and to examine whether this policy change will act as an effective tool for less consumption. To this end, two scenarios are examined; namely, a Baseline Scenario, which assumes continuation of current policy measures, and a Policy Scenario where production support is eliminated. According to the results by 2010, EU tobacco consumption in the Baseline scenario is expected to show a modest decline and a more significant decrease in the Policy scenario. In addition, the EU self-sufficiency ratio is projected to decrease in the Policy scenario by almost 14% compared to the Baseline. Therefore, with increasing liberalization of international trade, reducing EU tobacco supply would mostly shift tobacco production to other, mainly, developing countries. Therefore, public policy that aims to reduce tobacco use may need to focus on demand.

Suggested Citation

  • C. Stoforos & G. Mergos, 2004. "Modelling EU tobacco policy reform," Applied Economics, Taylor & Francis Journals, vol. 36(19), pages 2167-2175.
  • Handle: RePEc:taf:applec:v:36:y:2004:i:19:p:2167-2175
    DOI: 10.1080/000368404200068629
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    References listed on IDEAS

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    1. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-1072, June.
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    3. Kapuscinski, Cezary A. & Warr, Peter G., 1999. "Estimation of Armington elasticities: an application to the Philippines," Economic Modelling, Elsevier, vol. 16(2), pages 257-278, April.
    4. H. Guyomard & L. P. Mahé & C. Tavéra & T. Trochet, 1991. "Technical Change And Ec-Us Agricultural Trade Liberalisation," Journal of Agricultural Economics, Wiley Blackwell, vol. 42(2), pages 119-137.
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    Cited by:

    1. Gregmar Galinato & Aaron Olanie & Jon Yoder, 2013. "The Trade and Health Effects of Tobacco Regulations," Working Papers 2013-09, School of Economic Sciences, Washington State University.

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