Quasi‐Experimental Price Elasticities of Cigarette Demand and the Bootlegging Effect

Abstract

This paper updates the Lyon and Simon quasi‐experimental price elasticities of cigarette demand and studies their sensitivity to changes in the cigarette market over time as well as their sensitivity to the effects of bootlegging. The results indicate a downward trend in these elasticities over time and an upward bias for states where bootlegging exists. However, once the comparison group is modified to include bootlegging‐free states only, this difference over time and across groups becomes statistically insignificant.