This paper examines the demand for cigarettes in South Africa over a 20‐year period from 1970 to 1989. Consumption per capita was found to be significantly determined by price and disposable income per capita; but not by advertising. Price and income elasticities and consumers' surplus were computed from the demand model. The question was raised as to whether or not consumers' surplus should be regarded as having been inferred from a health‐hazard‐discounted demand schedule. The answer depends on the degree to which smoking decisions are taken with full information or, conversely, are influenced by habit. Given the latter assumption, the consumers' surplus measured for cigarette consumption is nevertheless substantially higher than the estimated health costs of smoking as computed by the Medical Research Council.
IN THE LAST DECADE industrial economics has been in a state of turmoil. The reason is not hard to find. The structure, conduct, performance (SCP) model, which served the profession so well for close on half a century, has not only been challenged theoretically but has also seen its empirical underpinnings, if not shattered, certainly fractured. This paper examines the state of the SCP paradigm and subjects it to test using South African data. The conventional model displays (unsurprisingly) robustness under a standard profits: concentration test. It is (unexpectedly) still fairly securely intact when subjected to one of the more recent types of test applied elsewhere in recent years. The paper falls into four main parts. Section 1 summarizes the 'state of the art'. Section 2 describes the data and sample used in this South African examination of the SCP paradigm. Section 3 displays our results, while Section 4 summarizes our conclusions and makes proposals for further research.
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