Price

The health consequences of smoking are serious and have been frequently detailed. A reduction in tobacco-related mortality hinges upon the ability to reduce tobacco usage. There is overwhelming evidence that higher cigarette prices reduce cigarettes demand, but little is known about the combined effect of price and non-price policies. This paper extends the analysis of price elasticities by estimating the effect of changes in price and non-price legislations in South Africa.

This paper provides an extensive analysis of the demand for cigarettes based on longitudinal data drawn from the South Africa National Income and Dynamic Study (NIDS: 2008 - 2014). We compare the results of the pooled OLS (POLS), the standard two-part model, the random and the fixed effect (RE, FE) panel regression. Like previous evidence into cigarette prices, we obtain negative price elasticity of demand for cigarettes, with the conditional elasticity (POLS and RE estimates) signicantly smaller than the total price elasticity (two-part model estimates).