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Quantifying brand loyalty: Evidence from the cigarette market

Author

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  • DeCicca, Philip
  • Kenkel, Donald
  • Liu, Feng
  • Somerville, Jason

Abstract

We exploit a quasi-experiment created when New York State began in 2011 to tax cigarettes sold on Native American Reservations. The regime change represents a unique opportunity to quantify brand loyalty because it almost doubled the price of premium-brand cigarettes, while Native brands were still untaxed. We use data from two different sources—the New York State Adult Tobacco Survey and the Nielsen Homescan Panel. We find that the increase in relative prices led to substantial declines in premium cigarette purchases. However, even among the premium consumers with the most to gain from switching, about three-quarters remained brand loyal.

Suggested Citation

  • DeCicca, Philip & Kenkel, Donald & Liu, Feng & Somerville, Jason, 2021. "Quantifying brand loyalty: Evidence from the cigarette market," Journal of Health Economics, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:jhecon:v:79:y:2021:i:c:s0167629621000977
    DOI: 10.1016/j.jhealeco.2021.102512
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    References listed on IDEAS

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    More about this item

    Keywords

    Cigarettes; Brand loyalty; Taxes;
    All these keywords.

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

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