Optimal Regulation of E-cigarettes: Theory and Evidence

Hunt Allcott and Charlie Rafkin

American Economic Journal: Economic Policy, 2022, vol. 14, issue 4, 1-50

Abstract: We model optimal e-cigarette regulation and estimate key parameters. Using tax changes and scanner data, we estimate relatively elastic demand. A demographic shift-share identification strategy suggests limited substitution between e-cigarettes and cigarettes. We field a new survey of public health experts who report that vaping is more harmful than previously believed. In our model's average Monte Carlo simulation, these results imply optimal e-cigarette taxes are higher than recent norms. However, e-cigarette subsidies may be optimal if vaping is a stronger substitute for smoking and is safer than our experts report, or if consumers overestimate the health harms from vaping.

JEL-codes: D12 D18 D61 H21 H23 I12 I18 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (7)

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DOI: 10.1257/pol.20200805

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