Taxation or regulation: Looking for a good anti-smoking policy

Listed in:

• Tax and price in HICs
• Aggregate demand for tobacco products

Abstract

This paper investigates the relative ability of two anti-smoking policies, taxes and regulation, in inducing reductions in cigarette consumption and in providing incentives to stop smoking (or not to start to). Our results based on Canadian data show that cigarette demand responds to taxes (elasticity of −0.28), but not to regulation, while the converse is true for the proportion of smokers in the population.