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Willingness to pay for low‐lung‐cancer‐risk cigarettes in Taiwan

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  • Man‐Ser Jan
  • Tsu‐Tan Fu
  • Chung L. Huang

Abstract

This study develops a conceptual framework based on the random utility model to estimate smokers' willingness to pay (WTP) for the hypothetical low‐lung‐cancer‐risk cigarettes in Taiwan. Following the approach taken by Viscusi (J Polit Econ 1990; 98: 1253–1269), an individual's subjective risk perception on the probability of developing lung cancer from smoking cigarettes was measured and used in the estimation of demand for safer cigarettes. Other factors that may affect a smoker's purchase decision toward the hypothetically safer cigarettes are also identified. The average WTP for one pack of low‐lung‐cancer‐risk cigarettes is estimated to be NT$44.15, which represents a 152% price increase over the average price of cigarettes currently sold in the market. Copyright © 2004 John Wiley & Sons, Ltd.

Suggested Citation

  • Man‐Ser Jan & Tsu‐Tan Fu & Chung L. Huang, 2005. "Willingness to pay for low‐lung‐cancer‐risk cigarettes in Taiwan," Health Economics, John Wiley & Sons, Ltd., vol. 14(1), pages 55-67, January.
    • Handle: RePEc:wly:hlthec:v:14:y:2005:i:1:p:55-67
    DOI: 10.1002/hec.894
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    References listed on IDEAS

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    1. McFadden, Daniel L., 1984. "Econometric analysis of qualitative response models," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 24, pages 1395-1457, Elsevier.
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    5. Viscusi, W Kip, 1990. "Do Smokers Underestimate Risks?," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1253-1269, December.
    6. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    7. Viscusi, W Kip, 1989. "Prospective Reference Theory: Toward an Explanation of the Paradoxes," Journal of Risk and Uncertainty, Springer, vol. 2(3), pages 235-263, September.
    8. Tsu‐Tan Fu & Jin‐Tan Liu & James K. Hammitt, 1999. "Consumer Willingness to Pay for Low‐Pesticide Fresh Produce in Taiwan," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(2), pages 220-233, May.
    9. Young Sook Eom, 1994. "Pesticide Residue Risk and Food Safety Valuation: A Random Utility Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(4), pages 760-771.
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