U.S. demand for tobacco products in a system framework

Abstract

This study estimated a system of demand for cigarettes, little cigars/cigarillos, large cigars, e-cigarettes, smokeless tobacco, and loose smoking tobacco using market-level scanner data for convenience stores. We found that the unconditional own-price elasticities for the six categories are -1.188, -1.428, -1.501, -2.054, -0.532, and -1.678, respectively. Several price substitute (e.g., cigarettes and e-cigarettes) and complement (e.g., cigarettes and smokeless tobacco) relationships were identified. Magazine and television advertising increased demand for e-cigarettes, and magazine advertising increased demand for smokeless tobacco and had spillover effects on demand for other tobacco products. We also reported the elasticities by U.S. census regions and market size. These results may have important policy implications, especially viewed in the context of the rise of electronic cigarettes and the potential for harm reduction if combustible tobacco users switch to non-combustible tobacco products. Copyright (c) 2016 John Wiley & Sons, Ltd.