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Demand for cigarettes in Taiwan: Domestic versus imported cigarettes

Publication Source

Hsieh, C.R., Hu, T.W., Lin, C.F.J. 1999

Publication Title

Contemporary Economic Policy

Publication Type

Journal article

e-lib-feature-image

Metadata

Region

Western Pacific

Economy status

Upper-middle-income economies

Tags Upper-middle-income economies, Western Pacific, Journal article, China

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Abstract

This paper uses annual time series data from Taiwan to empirically estimate the demand for cigarettes, in consideration of the import liberation of foreign cigarettes and of antismoking campaigns. The results indicate that the price elasticities for domestic and imported cigarettes are ‐0.6 and‐1.1, respectively. The cross‐price elasticities are 0.08 for domestic and 2.78 for imported cigarettes. The spread of cigarette health information has had a significantly negative effect on cigarette consumption. In addition, this study offers mild support to the argument that opening the market to imported cigarettes has resulted in significant increases in overall cigarette consumption. (JEL D12, 118)