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Title:Taxes, cigarette consumption and smoking intensity PDF Logo
Authors:Adda, Jérôme
Cornaglia, Francesca
Issue Date:2005
Series/Report no.:IZA Discussion Papers 1849
Abstract:This paper analyses the compensatory behavior of smokers. Exploiting data on cotinine concentration a metabolite of nicotine measured in a large population of smokers over time, we show that smokers compensate tax hikes by extracting more nicotine per cigarette. Our study makes two important contributions. First, as smoking more intensively a given cigarette is detrimental to health, our results question the usefulness of tax increases. Second, we develop a model of rational addiction where agents can also adjust their intensity of smoking and we show that the previous empirical results suffer from severe estimation biases.
Subjects:taxes
smoking
cigarettes
addiction
JEL:I1
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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