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Substitutes or Complements? Alcohol, Cannabis and Tobacco

Author

Listed:
  • Lisa Cameron

    (University of Melbourne)

  • Jenny Williams

    (School of Economics, University of Adelaide)

Abstract

This paper estimates the price responsiveness of cannabis, alcohol and cigarette use. Individual level data from four waves of the National Drug Strategy Household Survey are merged with previously unavailable state level data on cannabis prices, and ABS alcohol and tobacco price indices. In addition to own price effects, we estimate cross price effects and the impact of differing legal regimes for cannabis on the use of these three drugs. Establishing the nature of the interdependencies between cannabis, alcohol and cigarettes is important in the development of drug policy so that a policy directed at one drug does not unintentionally affect the'demand for other drugs. We find that participation in the use of all three drugs is responsive to own prices and that decriminalisation of cannabis leads to higher cannabis use. Cannabis is found to be a substitute for alcohol and a complement to tobacco. Alcohol and tobacco are found to be complements.

Suggested Citation

  • Lisa Cameron & Jenny Williams, 1999. "Substitutes or Complements? Alcohol, Cannabis and Tobacco," School of Economics Working Papers 1999-02, University of Adelaide, School of Economics.
  • Handle: RePEc:adl:wpaper:1999-02
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    File URL: http://www.economics.adelaide.edu.au/research/papers/doc/wp1999-02.pdf
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    Cited by:

    1. J. Williams & Rosalie Liccardo Pacula & Frank J. Chaloupka & Henry Wechsler, 2004. "Alcohol and marijuana use among college students: economic complements or substitutes?," Health Economics, John Wiley & Sons, Ltd., vol. 13(9), pages 825-843.
    2. Vinish Shrestha, 2015. "Estimating the Price Elasticity of Demand for Different Levels of Alcohol Consumption among Young Adults," American Journal of Health Economics, MIT Press, vol. 1(2), pages 224-254, Spring.

    More about this item

    Keywords

    illicit drug use; decriminalisation; price responsiveness; participation;

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • I1 - Health, Education, and Welfare - - Health

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