[The effect of tobacco prices on consumption: a time series data analysis for Mexico].
OBJECTIVE
To estimate the price elasticity of the demand for cigarettes in Mexico based on data sources and a methodology different from the ones used in previous studies on the topic.


METHODS
Quarterly time series of consumption, income and price for the time period 1994 to 2005 were used. A long-run demand model was estimated using Ordinary Least Squares (OLS) and the existence of a cointegration relationship was investigated. Also, a model using Dinamic Ordinary Least Squares (DOLS) was estimated to correct for potential endogeneity of independent variables and autocorrelation of the residuals.


RESULTS
DOLS estimates showed that a 10% increase in cigarette prices could reduce consumption in 2.5% (p<0.05) and increase government revenue in 16.11%.


CONCLUSIONS
The results confirmed the effectiveness of taxes as an instrument for tobacco control in Mexico. An increase in taxes can be used to increase cigarette prices and therefore to reduce consumption and increase government revenue.
Instituto Nacional de Salud Pública, México, DF, México.
Rosa Itandehui
RI
Olivera-Chávez
Rodolfo
R
Cermeño-Bazán
Belén Sáenz
BS
de Miera-Juárez
Jorge Alberto
JA
Jiménez-Ruiz
Luz Myriam
LM
Reynales-Shigematsu
D003132:Commerce; D003627:Data Interpretation, Statistical; D006801:Humans; D008800:Mexico; D012907:Smoking / Q000639:trends*; D062789:Tobacco Products