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Price Elasticity Estimates for Cigarette Demand in Vietnam

Author

Listed:
  • Patrick Eozenou

    (European University Institute, Villa San Paolo, Via Della Piazzuola 43, 50133 Florence, Italy)

  • Burke Fishburn

    (World Health Organization and Center for Disease Control.)

Abstract

In this paper, we analyze a complete demand system to estimate the price elasticity for cigarette demand in Vietnam. Following Deaton (1990), we build a spatial panel using cross sectional household survey data. We consider a model of simultaneous choice of quantity and quality. This allows us to exploit unit values from cigarette consumption in order to disentangle quality choice from exogenous price variations. We then rely on spatial variations in prices and quantities demanded to estimate an Almost Ideal Demand System. The estimated price elasticity for cigarette demand is centered around -0.53, which is in line with previous empirical studies for developing countries.

Suggested Citation

  • Patrick Eozenou & Burke Fishburn, 2009. "Price Elasticity Estimates for Cigarette Demand in Vietnam," Working Papers 05, Development and Policies Research Center (DEPOCEN), Vietnam.
    • Handle: RePEc:dpc:wpaper:0509
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    References listed on IDEAS

    as
    1. Jha, Prabhat & Chaloupka, Frank (ed.), 2000. "Tobacco Control in Developing Countries," OUP Catalogue, Oxford University Press, number 9780192632463.
    2. Angus Deaton, 1991. "Price Elasticities from Survey Data: Extensions and Indonesian Results," International Economic Association Series, in: Marc Nerlove (ed.), Issues in Contemporary Economics, chapter 10, pages 253-283, Palgrave Macmillan.
    3. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1975. "Transcendental Logarithmic Utility Functions," American Economic Review, American Economic Association, vol. 65(3), pages 367-383, June.
    4. Griliches, Zvi & Hausman, Jerry A., 1986. "Errors in variables in panel data," Journal of Econometrics, Elsevier, vol. 31(1), pages 93-118, February.
    5. L. Wade, 1988. "Review," Public Choice, Springer, vol. 58(1), pages 99-100, July.
    6. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
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    Cited by:

    1. G. Guindon, 2014. "The impact of tobacco prices on smoking onset in Vietnam: duration analyses of retrospective data," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(1), pages 19-39, January.
    2. Enayatollah Homaie Rad & Mohammad Habibullah Pulok & Satar Rezaei & Anita Reihanian, 2021. "Quality and quantity of price elasticity of cigarette in Iran," International Journal of Health Planning and Management, Wiley Blackwell, vol. 36(1), pages 60-70, January.
    3. Salti, Nisreen & Brouwer, Elizabeth & Verguet, Stéphane, 2016. "The health, financial and distributional consequences of increases in the tobacco excise tax among smokers in Lebanon," Social Science & Medicine, Elsevier, vol. 170(C), pages 161-169.

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    More about this item

    Keywords

    Price elasticity; Cigarette Demand; Taxation; Consumption; Vietnam.;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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