Prices and E-Cigarette Demand: Evidence From the European Union

Conclusions: Our results indicate that the sales of e-cigarettes are responsive to price changes, which suggests that excise taxes can help governments to mitigate an increase in e-cigarette use. E-cigarettes and regular cigarettes are substitutes, with higher cigarette prices being associated with increased e-cigarette sales. Making combustible cigarettes more expensive compared to e-cigarettes could be effective in moving current combustible smokers to e-cigarettes, which might have positive health effects. Implications: This study is an exploratory analysis of the issues around e-cigarette taxation in Europe. Our results suggest that taxation is a measure that could potentially address the concerns of both opponents and proponents of e-cigarettes: taxes on e-cigarettes could be used to raise prices so as to deter e-cigarette initiation by never users, while concomitant greater tax increases on regular cigarettes could incentivize switching from combustible products to e-cigarettes. The estimates from our models suggest that e-cigarette demand is possibly more responsive to price than cigarette demand. Policymakers who consider implementing excise taxes on e-cigarettes should take this difference in price responsiveness of demand for these two products under consideration.
Source: Nicotine and Tobacco Research - Category: Addiction Authors: Tags: Original Investigation Source Type: research