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Cigarette, Alcohol, and Drug Demand for Young Population

Mohammed Al-Mahish
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Mohammed Al-Mahish: King Faisal University, AlAhsa, Saudi Arabia

Expert Journal of Economics, 2017, vol. 5, issue 2, 62-70

Abstract: The purpose of this paper is to estimate demand elasticities of cigarette, alcohol, and cocaine for a sample of young American population. To deal with the inherent censoring issue in cigarette, alcohol, and drug consumption data, the paper applies ZINB, Tobit, and a two-step AIDS model. Findings indicate habit formation in young American consumption. Also, the results show that alcohol has an inelastic income elasticity. The ZINB model price elasticity, Marshallian own price elasticity, and Hicksian own price elasticity all agree that drug has a negative inelastic own price elasticity. This implies that price increased by drug traders increases their total revenue and slightly affects the quantity demanded of drug.

Keywords: alchohol demand; censored data; cigarette demand; deman; drug demand (search for similar items in EconPapers)
JEL-codes: D04 D12 R22 (search for similar items in EconPapers)
Date: 2017
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