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The Analysis of the Tobacco Product Bans Using a Random Coefficients Logit Model

Author

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  • Bartosz OlesiÅ„ski

    (Warsaw School of Economics
    EY Economic Analysis Team)

Abstract

The studies of tobacco demand accounting for product diversity have attracted much attention in the literature, but the ex ante measurements of the effects of product bans are relatively scarce. This paper aims to fill this gap and considers the 2020 EU-induced ban on menthol cigarettes as an example, focusing on the Polish market. In the proposed approach, a 2004-2017 productlevel dataset for Poland is used to estimate a random coefficients logit model and simulate the effects of the menthol ban and, for comparison, a cigarette excise hike. The dataset is unique as it encompassess substantial changes in the tobacco tax level and structure that took place in Poland over the sample period. The simulations suggest that the ban, despite switching of consumers towards non-menthol cigarettes, results in relatively strong reduction in demand for duty-paid cigarettes, stronger than in the case of the excise hike.

Suggested Citation

  • Bartosz OlesiÅ„ski, 2020. "The Analysis of the Tobacco Product Bans Using a Random Coefficients Logit Model," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 12(2), pages 113-144, June.
    • Handle: RePEc:psc:journl:v:12:y:2020:i:2:p:113-144
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    More about this item

    Keywords

    tobacco policy analyses; discrete choice models; substitution effects; BLP;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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