Who Pays Cigarette Taxes? The Impact of Consumer Price Search
03 medical and health sciences
jel:I1
0302 clinical medicine
cigarette taxes, consumers, smokers
jel:I18
jel:H2
0502 economics and business
05 social sciences
jel:H22
DOI:
10.1162/rest_a_00303
Publication Date:
2012-07-18T22:12:40Z
AUTHORS (3)
ABSTRACT
Abstract We conduct an empirical study of the impact of consumer price search on the shifting of cigarette excise taxes to consumer prices. We use novel data on the prices that smokers report paying and document substantial price dispersion. We find that cigarette taxes are shifted at lower rates to carton buyers and, especially, smokers who buy cartons of cigarettes in a state other than their state of residence. We also find evidence that taxes are shifted at somewhat lower rates to the prices paid by heavier smokers and at somewhat higher rates to the prices paid by smokers of light cigarettes.
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