The Effects of E-Cigarette Taxes on E-Cigarette Prices and Tobacco Product Sales: Evidence from Retail Panel Data
We estimate the effect of e-cigarette tax rates on e-cigarette prices, e-cigarette sales, and sales of other tobacco products using NielsenIQ Retail Scanner data from 2013 to 2019. We find that 90% of e-cigarette taxes are passed on to consumer retail prices. We then estimate reduced form and instrumental variables regressions to examine the effects of e-cigarette and cigarette taxes and prices on sales. We calculate an e-cigarette own-price elasticity of -2.2 and particularly large elasticity of demand for flavored e-cigarettes. Further, we document a cigarette own-price elasticity of -0.4 and positive cross-price elasticities of demand between e-cigarettes and cigarettes, suggesting economic substitution.
Published Versions
Chad Cotti & Charles Courtemanche & Joanna Catherine Maclean & Erik Nesson & Michael F. Pesko & Nathan W. Tefft, 2022. "The effects of e-cigarette taxes on e-cigarette prices and tobacco product sales: Evidence from retail panel data," Journal of Health Economics, vol 86. citation courtesy of