The effects of price and smoking risk information on the demand for tobacco in Taiwan: An empirical study

Listed in:

• Tax and price in LMICs
• Aggregate demand for tobacco products
• ... on tax revenue
• Impact of tobacco taxation

Abstract

This study evaluates the effects of a cigarette price increase and smoking risk information on tobacco consumption in Taiwan. Tobacco price, expenditure and an index of smoking risk information for Taiwan were introduced into a Central Bureau of Statistics (CBS) demand model to estimate several cigarette demand elasticity coefficients. According to this model, increasing the cigarette price is a more effective means of reducing cigarette consumption than disseminating more risk information. In addition, we found that a price rise of NT$5 per cigarette pack would cause a reduction in the consumption of domestic and imported cigarettes of 3.23 and 4.86 packs per capita, respectively. Total per capita consumption of cigarettes would be reduced annually by 8.09 packs (7.56%). Despite this reduction in cigarette consumption, the increase in cigarette price would at the same time lead to a significant net increase in tax revenue to the Taiwan government.