IDEAS home Printed from https://ideas.repec.org/p/ucb/calbwp/92-202.html
   My bibliography  Save this paper

Oligopoly Structure and the Incidence of Cigarette Excise Taxes

Author

Listed:
  • Paul G. Barnett, Theodore E. Keeler, Teh-wei Hu.

Abstract

The economic incidence of cigarette excise taxes in the United States is estimated for 1955-1989. The analysis simultaneously considers consumer demand and the reactions of manufacturers and the distribution industry, and contrasts the incidence of federal with state and local taxes. A cost function was estimated, and found that cigarette manufacture is subject to increasing returns to scale. The model of the market found a mean price elasticity of demand of -1.08. Price elasticity has been decreasing. The elimination of simultaneity bias may explain why this estimate is higher than that of other studies. The industry was found to be less competitive than a Cournot industry. Competition among manufacturers has decreased substantially since 1980. This may be because manufacturers have become less concerned about anti-trust scrutiny or the prospect of new competitors. A simulation shows that an increase in the federal excise tax causes a greater increase in price, and a greater decrease in consumption, than does the same increase in the average of state and local tax rates. This is consistent with the view that in the face of an increase in a state or local tax, some demand shifts to neighboring jurisdictions with lower taxes.

Suggested Citation

  • Paul G. Barnett, Theodore E. Keeler, Teh-wei Hu., 1992. "Oligopoly Structure and the Incidence of Cigarette Excise Taxes," Economics Working Papers 92-202, University of California at Berkeley.
  • Handle: RePEc:ucb:calbwp:92-202
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    References listed on IDEAS

    as
    1. Jeffrey I. Bernstein & M. Ishaq Nadiri, 1982. "Financing and Investment in Plant and Equipment and Research and Development," NBER Working Papers 1017, National Bureau of Economic Research, Inc.
    2. Partha Dasgupta & Joseph Stiglitz, 1980. "Uncertainty, Industrial Structure, and the Speed of R&D," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 1-28, Spring.
    3. Roberts, Russell D, 1987. "Financing Public Goods," Journal of Political Economy, University of Chicago Press, vol. 95(2), pages 420-437, April.
    4. Auerbach, Alan J., 1984. "Taxes, firm financial policy and the cost of capital: An empirical analysis," Journal of Public Economics, Elsevier, vol. 23(1-2), pages 27-57.
    5. Don Fullerton & Andrew B. Lyon, 1988. "Tax Neutrality and Intangible Capital," NBER Chapters,in: Tax Policy and the Economy: Volume 2, pages 63-88 National Bureau of Economic Research, Inc.
    6. Bronwyn H. Hall, 1990. "The Manufacturing Sector Master File: 1959-1987," NBER Working Papers 3366, National Bureau of Economic Research, Inc.
    7. Zvi Griliches, 1998. "Issues in Assessing the Contribution of Research and Development to Productivity Growth," NBER Chapters,in: R&D and Productivity: The Econometric Evidence, pages 17-45 National Bureau of Economic Research, Inc.
    8. Altshuler, Rosanne, 1988. "A Dynamic Analysis of the Research and Experimentation Credit," National Tax Journal, National Tax Association, vol. 41(4), pages 453-466, December.
    9. Altshuler, Rosanne, 1988. "A Dynamic Analysis of the Research and Experimentation Credit," National Tax Journal, National Tax Association, vol. 41(4), pages 453-66, December.
    10. Ariel Pakes & Mark Schankerman, 1984. "The Rate of Obsolescence of Patents, Research Gestation Lags, and the Private Rate of Return to Research Resources," NBER Chapters,in: R&D, Patents, and Productivity, pages 73-88 National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hai-Yen Sung & Teh- Wei Hu & Theodore E. Keeler, 1994. "A Dynamic Simultaneous-Equations Model for Cigarette Consumption in the Western States," Public Economics 9403002, EconWPA, revised 04 Apr 1994.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucb:calbwp:92-202. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum). General contact details of provider: http://edirc.repec.org/data/debrkus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.