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Quantifying brand loyalty: Evidence from the cigarette market

Philip DeCicca, Donald Kenkel (), Feng Liu and Jason Somerville

Journal of Health Economics, 2021, vol. 79, issue C

Abstract: We exploit a quasi-experiment created when New York State began in 2011 to tax cigarettes sold on Native American Reservations. The regime change represents a unique opportunity to quantify brand loyalty because it almost doubled the price of premium-brand cigarettes, while Native brands were still untaxed. We use data from two different sources—the New York State Adult Tobacco Survey and the Nielsen Homescan Panel. We find that the increase in relative prices led to substantial declines in premium cigarette purchases. However, even among the premium consumers with the most to gain from switching, about three-quarters remained brand loyal.

Keywords: Cigarettes; Brand loyalty; Taxes (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:79:y:2021:i:c:s0167629621000977

DOI: 10.1016/j.jhealeco.2021.102512

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Journal of Health Economics is currently edited by J. P. Newhouse, A. J. Culyer, R. Frank, K. Claxton and T. McGuire

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