07 juillet 2009
Changes in cigarette prices
A large number of studies have been conducted to estimate demand for cigarettes in many countries.
The estimated price elasticities of demand for cigarettes from those studies vary. But most of the
estimates tend to be less than one, i.e., the demand for cigarettes is price-inelastic. A meta-analysis of
the determinants of cigarette consumption, which analysed results from 48 studies, yielded a weighted
mean price elasticity of demand for cigarettes of -0.4.
The short-term
price elasticity recommended by an expert panel for policy analysis is -0.4 . The long-term elasticity is about 1.5 times the short-term price elasticity. Youth and the poor
tend to be more responsive to changes in cigarette prices. Income, in general, is positively related to
demand for cigarettes. The estimated income elasticity is 0.36, but decreases with time. Restrictions on
smoking in public places and private work sites have significantly reduced demand for cigarettes
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