Cotti, Chad D.
[Author]
;
Courtemanche, Charles J.
[Other];
Maclean, Johanna Catherine
[Other];
Nesson, Erik T.
[Other];
Pesko, Michael F.
[Other];
Tefft, Nathan
[Other]National Bureau of Economic Research
The Effects of E-Cigarette Taxes on E-Cigarette Prices and Tobacco Product Sales
Published:
Cambridge, Mass: National Bureau of Economic Research, 2020
Published in:NBER working paper series ; no. w26724
Extent:
1 Online-Ressource; illustrations (black and white)
Language:
English
DOI:
10.3386/w26724
Identifier:
Reproduction note:
Hardcopy version available to institutional subscribers
Origination:
Footnote:
System requirements: Adobe [Acrobat] Reader required for PDF files
Mode of access: World Wide Web
Description:
We explore the effect of e-cigarette taxes enacted in eight states and two large counties on e-cigarette prices, e-cigarette sales, and sales of other tobacco products. We use the Nielsen Retail Scanner data from 2011 to 2017, comprising approximately 35,000 retailers nationally. We calculate a Herfindahl-Hirschman Index of 0.251 for e-cigarette retail purchases, indicating high market concentration, and a tax-to-price pass-through of 1.6. We then calculate an e-cigarette own-price elasticity of -2.6 and a positive cross-price elasticity of demand between e-cigarettes and traditional cigarettes of 1.1, suggesting that e-cigarettes and traditional cigarettes are economic substitutes. We simulate that for every one standard e-cigarette pod (a device that contains liquid nicotine in e-cigarettes) of 0.7 ml no longer purchased as a result of an e-cigarette tax, the same tax increases traditional cigarettes purchased by 6.2 extra packs