The Demand for Tobacco in Post-Unification Italy

Carlo Ciccarelli () and Gianni De Fraja

No 12/13, Discussion Papers in Economics from Division of Economics, School of Business, University of Leicester

Abstract: This paper studies the demand for tobacco products in post-unification Italy. We construct a very detailed panel dataset of yearly consumption in the 69 Italian provinces from 1871 to 1913, and use it to estimate the Becker and Murphy (1988) rational addiction model. We find support for the presence of rational addiction; we also find that, in the period considered, tobacco was a normal good in Italy: its consumption increase with income. Subsequently, we separate the analysis of the components of the aggregate tobacco consumption (fine-cut tobacco, snuff, cigars and cigarettes), and tentatively suggest that habit formation was a stronger factor on the persistence of consumption than physical addiction. The paper ends by showing that the introduction of the Bonsack machine did not coincide with changes in the structure of the demand for tobacco, suggesting cost driven technological change.

Keywords: Smoking; Italian Kingdom; Rational Addiction; Panel Data (search for similar items in EconPapers)
JEL-codes: D11 I18 N33 (search for similar items in EconPapers)
Date: 2012-06
New Economics Papers: this item is included in nep-hea and nep-his
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The demand for tobacco in post-unification Italy (2014)
Working Paper: The Demand for Tobacco in Post-Unification Italy (2014)
Working Paper: The Demand for Tobacco in Post-Unification Italy (2012)
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