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The Effects of E-Cigarette Taxes on E-Cigarette Prices and Tobacco Product Sales: Evidence from Retail Panel Data

Chad Cotti, Charles Courtemanche, Johanna Maclean, Erik Nesson, Michael Pesko and Nathan Tefft

No 26724, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We estimate the effect of e-cigarette tax rates on e-cigarette prices, e-cigarette sales, and sales of other tobacco products using NielsenIQ Retail Scanner data from 2013 to 2019. We find that 90% of e-cigarette taxes are passed on to consumer retail prices. We then estimate reduced form and instrumental variables regressions to examine the effects of e-cigarette and cigarette taxes and prices on sales. We calculate an e-cigarette own-price elasticity of -2.2 and particularly large elasticity of demand for flavored e-cigarettes. Further, we document a cigarette own-price elasticity of -0.4 and positive cross-price elasticities of demand between e-cigarettes and cigarettes, suggesting economic substitution.

JEL-codes: I1 I12 (search for similar items in EconPapers)
Date: 2020-01
New Economics Papers: this item is included in nep-hea and nep-pub
Note: EH
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Published as Chad Cotti & Charles Courtemanche & Joanna Catherine Maclean & Erik Nesson & Michael F. Pesko & Nathan W. Tefft, 2022. "The effects of e-cigarette taxes on e-cigarette prices and tobacco product sales: Evidence from retail panel data," Journal of Health Economics, vol 86.

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