title: Estimating cross-price elasticity of e-cigarettes using a simulated demand procedure.
abstract: BACKGROUND
  Our goal was to measure the cross-price elasticity of electronic cigarettes (e-cigarettes) and simulated demand for tobacco cigarettes both in the presence and absence of e-cigarette availability.
  
  
  METHODS
  A sample of New Zealand smokers (N = 210) completed a Cigarette Purchase Task to indicate their demand for tobacco at a range of prices. They sampled an e-cigarette and rated it and their own-brand tobacco for favorability, and indicated how many e-cigarettes and regular cigarettes they would purchase at 0.5×, 1×, and 2× the current market price for regular cigarettes, assuming that the price of e-cigarettes remained constant.
  
  
  RESULTS
  Cross-price elasticity for e-cigarettes was estimated as 0.16, and was significantly positive, indicating that e-cigarettes were partially substitutable for regular cigarettes. Simulated demand for regular cigarettes at current market prices decreased by 42.8% when e-cigarettes were available, and e-cigarettes were rated 81% as favorably as own-brand tobacco. However when cigarettes cost 2× the current market price, significantly more smokers said they would quit (50.2%) if e-cigarettes were not available than if they were available (30.0%).
  
  
  CONCLUSIONS
  Results show that e-cigarettes are potentially substitutable for regular cigarettes and their availability will reduce tobacco consumption. However, e-cigarettes may discourage smokers from quitting entirely as cigarette price increases, so policy makers should consider maintaining a constant relative price differential between e-cigarettes and tobacco cigarettes.
authors.affiliation: University of Canterbury, Department of Psychology, Christchurch, New Zealand; randolph.grace@canterbury.ac.nz.
authors.forename: Randolph C
authors.initials: RC
authors.lastname: Grace
authors.affiliation: School of Biological Sciences, Victoria University of Wellington, Wellington, New Zealand;
authors.forename: Bronwyn M
authors.initials: BM
authors.lastname: Kivell
authors.affiliation: University of Canterbury, Department of Psychology, Christchurch, New Zealand; Health New Zealand, Ltd., Christchurch, New Zealand.
authors.forename: Murray
authors.initials: M
authors.lastname: Laugesen
mesh_terms: D000293:Adolescent; D000328:Adult; D000368:Aged; D003132:Commerce / Q000191:economics; D003365:Costs and Cost Analysis; D066300:Electronic Nicotine Delivery Systems / Q000191:economics*; D005260:Female; D006801:Humans; D008297:Male; D008875:Middle Aged; D018803:Models, Economic; D009520:New Zealand; D012907:Smoking / Q000191:economics; D012923:Social Class; D011795:Surveys and Questionnaires; D013660:Taxes / Q000191:economics; D062789:Tobacco Products / Q000191:economics*; D014029:Tobacco Use Disorder / Q000191:economics*; D055815:Young Adult