A Dynamic Analysis of the U.S. Cigarette Market and Antismoking Policies

Wei Tan

A chapter in Structural Econometric Models, 2013, vol. 31, pp 387-432 from Emerald Group Publishing Limited

Abstract: A dynamic oligopoly model of the cigarette industry is developed to study the responses of firms to various antismoking policies and to estimate the implications for the policy efficacy. The structural parameters are estimated using a combination of micro and macro level data and firms’ optimal price and advertising strategies are solved as a Markov Perfect Nash Equilibrium. The simulation results show that tobacco tax increase reduces both the overall smoking rate and the youth smoking rate, while advertising restrictions may increase the youth smoking rate. Firm’s responses strengthen the impact of antismoking policies in the short run.

Keywords: Dynamic oligopoly; cigarette market; antismoking policies; L1 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:eme:aecozz:s0731-9053(2013)0000032012

DOI: 10.1108/S0731-9053(2013)0000032012

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