Demand For E-Cigarettes Based On Nicotine Strength: Evidence From Retail Sales

Megan C. Diaz, Adrian Bertrand, Tatum McKay, Barbara A. Schillo, Bushraa S. Khatib and John Tauras

No 32435, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using NielsenIQ Retail Scanner data, we estimate demand equations for e-cigarettes by nicotine concentration. Overall, the models show that the price elasticities of demand range from -2.117 to -1.494. In a rapidly evolving e-cigarette market, demand for e-cigarettes varies considerably by nicotine strength. High-nicotine products, which have many close substitutes, are found to be more responsive to changes in price. Demand for low-nicotine products, with few close substitutes, are found to be less responsive to changes in price. Our findings also suggest that e-cigarettes with the lowest and highest nicotine concentrations may be economic complements, suggesting concurrent use. Unlike available evidence on cross-tax elasticities of demand, we find no evidence of an economic relationship between traditional cigarettes and e-cigarettes when broken down by nicotine strength concentration.

JEL-codes: I12 I18 (search for similar items in EconPapers)
Date: 2024-05
New Economics Papers: this item is included in nep-hea and nep-ind
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