Do cigarette producers price-discriminate by state? An empirical analysis of local cigarette pricing and taxation.
This study analyzes the interactive effects of oligopoly pricing, state taxation, and anti-smoking regulations on retail cigarette prices by state, using panel data for the 50 US states between 1960 and 1990. The results indicate that cigarette producers do price-discriminate by state, though the effect is not large relative to the final retail price. There are two further results: (1) state taxes are more than passed on - a 1-cent state tax increase results in a price increase of 1.11 cents, and (2) sellers offset state and local anti-smoking laws with lower prices, thereby blunting effects of the regulations.
Keeler
T E
TE
Department of Economics, University of California, Berkeley 94720, USA.
Hu
T W
TW
Barnett
P G
PG
Manning
W G
WG
Sung
H Y
HY
D003132:Commerce / Q000191:economics*; D004465:Economic Competition; D005249:Fees and Charges / Q000706:statistics & numerical data*; D018803:Models, Economic; D010947:Plants, Toxic; D012907:Smoking / Q000191:economics*; D013660:Taxes / Q000706:statistics & numerical data*; D014026:Nicotiana; D014481:United States