Price elasticity and other forces shaping cigarette demand in South Africa over 1996-2006

Stellenbosch Working Paper Series No. WP14/2007
 
Publication date: 2007
 
Author(s):
[protected email address] (Department of Economics, Stellenbosch University)
 
Abstract:

The study seeks to re-investigate the price elasticity of South African cigarette demand over the period 1996 to 2006. At first glance, rising cigarette prices seem to have played an important role in reducing cigarette consumption over the sample period, especially during the late nineties. But how dependent is the impact of price increases on general economic conditions and overall health awareness among smokers? Health awareness, in particular, has not received sufficient attention in the South African context, due to a lack of data. Furthermore, previous estimates of price and income elasticity of cigarette demand are based on long annual time series data, which do not allow for changes in underlying tastes and preferences. The paper attempts to disentangle the forces of price, income, health awareness and policy intervention using a quarterly dataset. However, the study also cautions against the upward bias in estimates derived from formal cigarette sales data – in the light of increasing illicit cigarette volumes in South Africa.

 
JEL Classification:

D12, H21, I18, C40

Keywords:

Price elasticity, Tobacco control, Cigarettes, Illicit cigarettes, Excise duties, Health awareness

Download: PDF (250 KB)

Login

(for staff & registered students)



Need a password?
Forgot your password?

Upcoming Seminars

No seminars are currently listed. Please check back soon.
 
More...

BER Weekly

13 September 2021
It was a data-heavy week in SA, with the 2021Q2 real GDP data indicating that the economy had better-than-expected recovery momentum in the first half of the year. While growth remained solid in the second quarter, both the survey and actual data released last week revealed the significant impact that the range of shocks at the start of the third quarter...

Read the full issue
 

Upcoming Seminars

No seminars are currently listed. Please check back soon.
 
More...

BER Weekly

13 September 2021
It was a data-heavy week in SA, with the 2021Q2 real GDP data indicating that the economy had better-than-expected recovery momentum in the first half of the year. While growth remained solid in the second quarter, both the survey and actual data released last week revealed the significant impact that the range of shocks at the start of the third quarter...

Read the full issue