Price elasticity of demand for cigarettes in Bosnia and Herzegovina: microdata analysis

Gligorić, Dragan; Pepić, Anđela; Petković, Saša; Ateljevic, Jovo; Vukojevic, Borislav

doi:10.1136/tobaccocontrol-2019-055258

Cited by 5 publications

(11 citation statements)

References 7 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…During that period some major changes in tobacco taxation policy had happened that led to singificant increase in cigarette prices (Aljinović Barać et al, 2018). Nevertheless, the obtained result falls within the range of unconditional cigarette price elasticities for comparable studies using Deaton's methodology (from −0.5 for Vietnam (Eozenou & Fishburn, 2009) to −1.4 for Bosnia and Herzegovina (Gligorić et al, 2020). The symmetry-unrestricted estimates provide similar results.…”

Section: Resultssupporting

confidence: 79%

“…To the best of authors' knowledge, there are only several studies using Deaton's methodology to estimate the price elasticities of cigarettes and tobacco. Price elasticity estimates from these studies vary considerably, and the most range from -0.2 to -1.4 (Chavez, 2016;Chelwa & Walbeek, 2019;Chen & Xing, 2011;Eozenou & Fishburn, 2009;Gligorić et al, 2020;John, 2005John, , 2008Mugosa et al, 2020;Salti et al, 2015;Vladisavljevic et al, 2020). However, it should be noted that some of these studies considered all households in the budget share regression, some considered only households with positive purchases, and some were not explicit about this matter.…”

Section: Discussionmentioning

confidence: 99%

“…(John et al, 2019). Also, estimating both conditional and unconditional price elasticities using AIDS model provides an opportunity to compare obtained results with similar studies that considered only conditional tobacco demand (Chelwa & Walbeek, 2019;John, 2008;Vladisavljevic, Zubović, Đukić, & Jovanović, 2020), as well as with those that included all households in the analysis (John, 2005;Eozenou & Fishburn, 2009;Guindon, Nandi, & Chaloupka et al, 2011;Gligorić, Pepić, Petković, Ateljević, & Vukojević, 2020). To the best of the authors' knowledge, the only study that reports both conditional and unconditional price elasticities using Deaton's method on HBS data is (Mugosa, Cizmovic, Lakovic, & Popovic, 2020).…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Cigarette price elasticity in Croatia – analysis of household budget surveys

Barać

Burnać

Rogošić

et al. 2021

Journal of Applied Economics

View full text Add to dashboard Cite

This study estimates both conditional and unconditional cigarette price elasticity of quantity demanded in Croatia. Authors use Deaton's method, also known as the Almost Ideal Demand-System (AIDS), to obtain consistent estimates of the cigarette price elasticity on the sample of Croatian households. The data from household surveys (HBS) conducted in Croatia for three periods (2010, 2011 and 2014 year) is provided by the Croatian Bureau of Statistics (CBS). Estimated unconditional cigarette price elasticity is −1.38 and estimated conditional price elasticity is −0.63. Simulation of the tax effects shows that rising specific excise tax for 10 percent would result in 2 percent decrease in cigarette consumption while total tax revenues would increase by 1.97 percent. This study provides evidence that the demanded quantity for cigarettes is responsive to their prices. Consequently, this implies that tobacco tax policy can be used as an efficient tool for reducing cigarette consumption in Croatia.

show abstract

Section: Resultssupporting

confidence: 79%

Section: Discussionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Cigarette price elasticity in Croatia – analysis of household budget surveys

Barać

Burnać

Rogošić

et al. 2021

Journal of Applied Economics

View full text Add to dashboard Cite

show abstract

“…Another reason for continuing to smoke in different situations is that smokers can change their brand to pay less but still receive their needed nicotine to suppress withdrawal symptoms and provide positive effects such as increased energy and attention. Indeed, the availability of affordable substitute products is a reason for the high price elasticity of demand for cigarettes [30][31][32].…”

Section: Discussionmentioning

confidence: 99%

The effect of price on cigarette consumption, distribution, and sale in Tehran: a qualitative study

et al. 2021

View full text Add to dashboard Cite

Background Appropriate increases in tobacco taxes and prices are an essential component of comprehensive tobacco control strategies. This study investigates factors related to the use, sale, and distribution of cigarettes in Iran, focusing on the relationship between cigarette price and its consumption. Methods This interview-based qualitative study was conducted among 20 participants, including cigarette smokers, retail shop owners, large-scale distributors, and an expert in tobacco control research. Results Seven themes were extracted from participant interviews, including the type and price of cigarette, the best time to sell cigarettes, profits from the sale of cigarette, affordability, rise in cigarette price and smokers’ reaction to it, lobbying and black-market sales of cigarettes, and the sale and distribution of cigarettes across the country. Although the price of cigarettes in Iran has shown some increases in the past decade, the timing of these increases are not predictable and the limited amount of these increases has not reduced the use of cigarettes. Following a price increase, consumers are more likely to switch from buying packets to single cigarettes, or buy a less expensive brand, then to quit. Moreover, increases in prices may encourage smokers and sellers to buy a large number of cigarettes and store them for a rainy day. Another adverse effect may be increased smuggling of illicit cigarettes to balance the pressure caused by rising prices. Conclusions Our findings highlight two important aspects concerning cigarette pricing in Iran. First is the change in the type of purchase from the whole box of cigarettes to the single stick cigarette or swapping to less expensive cigarettes. Second, increase in cigarette price (either through taxing or regular increases) could be offset by flooding smuggled cigarettes into the market. Therefore, in addition to raising cigarette prices, reducing cigarette consumption rates in Iran requires the development and effective implementation of regulatory policies to control cigarette smuggling, reduce purchasing, and subsequently curb the use of this leading cause of premature morbidity and mortality.

show abstract

“…5 6 Previous research that was based on the data from Household Budget Survey (HBS) and conducted in B&H in 2011 and 2015, and the Deaton demand model, 7 showed that if cigarette prices in B&H increased by 10%, the demand for cigarettes would decrease by 13.66%. 8 Since the main driver of the increase in cigarette prices in B&H over the last decade has been the increase in excise taxes, the high response rate of cigarette demand to price increase indicates that increase in excise taxes is an effective tobacco control policy. However, defining the most appropriate tobacco tax and other polices requires an analysis of the effects of this policy on the smoking prevalence, smoking consumption of different socioeconomic groups, as well as on public revenue.…”

Section: Introductionmentioning

confidence: 99%

Price and income elasticity of cigarette demand in Bosnia and Herzegovina by different socioeconomic groups

et al. 2022

Self Cite

View full text Add to dashboard Cite

BackgroundTobacco tax policy in Bosnia and Herzegovina (B&H) assumes a gradual annual increase in specific excise taxes on cigarettes. However, it is insufficient to reduce significantly consumption. This paper examines effects of the increase in cigarette prices and disposable income on cigarette demand in B&H by different income consumer groups.MethodsBased on the Household Budget Surveys and microdata from 2007, 2011 and 2015, we employed logit model to estimate prevalence and Deaton’s model to estimate intensity elasticity of cigarette demand for the sample of 21 424 households (9953 are smoking households) by different income groups. We used obtained elasticities and estimated the impact of tax increase on cigarette consumption and government revenue in three tax increase scenarios.ResultsTen per cent price increase would reduce the consumption of low-income households by 14%, as opposed to 9.9% for middle-income and 7% for high-income households. Low-income households would significantly increase the demand for cigarettes compared with high-income households if income increased. Increase in the specific excise tax by 25% would reduce cigarette consumption and increase government revenue, while the low-income group would experience a reduction in tax burden.ConclusionsChanges in prices have different impacts on tobacco prevalence and consumption of low-income compared with middle-income and high-income socioeconomic groups. Low-income households are most responsive to changes in prices and income. Thus, the poor in B&H would benefit from an increase in tobacco excise taxes and price.

show abstract

Price elasticity of demand for cigarettes in Bosnia and Herzegovina: microdata analysis

Cited by 5 publications

References 7 publications

Cigarette price elasticity in Croatia – analysis of household budget surveys

Cigarette price elasticity in Croatia – analysis of household budget surveys

The effect of price on cigarette consumption, distribution, and sale in Tehran: a qualitative study

Price and income elasticity of cigarette demand in Bosnia and Herzegovina by different socioeconomic groups

Contact Info

Product

Resources

About