which reforms work and under what institutional environment evidence from a new data set on structural reforms abstract are structural reforms growth enhancing is the effectiveness of reforms constrained by a country s distance from the technology frontier or by its institutional environment this paper takes a new and comprehensive look at these questions by employing a novel data set that includes several kinds of real trade agriculture and networks and financial domestic finance banking securities and capital account reforms for an extensive list of developed and developing countries going back to the early 1970s first pass evidence based on growth breaks analysis and on panel growth regressions suggests that on average both real and financial sector reforms are positively associated with higher growth however on several occasions botched reforms resulted in growth disasters more important the positive reform growth relationship is shown to be highly heterogeneous and to be influenced by a country s constraints on the authority of the executive power and by its distance from the technology fro

the uk demand for cigarettes 1954 1986 a double hurdle approach the double hurdle perspective suggests that it is crucial to distinguish between per capita and per smoker consumption when estimating the demand for cigarettes this paper presents a two equation model which identifies consumption and participation as two separate decisions the model is estimated with annual data on u k cigarette expenditure and participation rates highlighting the differing influence of prices income and health scares on the participation rate and on smokers demand for cigarettes

do cigarette producers price discriminate by state an empirical analysis of local cigarette pricing and taxation abstract this study analyzes the interactive effects of oligopoly pricing state taxation and anti smoking regulations on retail cigarette prices by state using panel data for the 50 us states between 1960 and 1990 the results indicate that cigarette producers do price discriminate by state though the effect is not large relative to the final retail price there are two further results 1 state taxes are more than passed on a 1 cent state tax increase results in a price increase of 1 11 cents and 2 sellers offset state and local anti smoking laws with lower prices thereby blunting effects of the regulations

quasi experimental price elasticities of cigarette demand and the bootlegging effect this paper updates the lyon and simon quasi experimental price elasticities of cigarette demand and studies their sensitivity to changes in the cigarette market over time as well as their sensitivity to the effects of bootlegging the results indicate a downward trend in these elasticities over time and an upward bias for states where bootlegging exists however once the comparison group is modified to include bootlegging free states only this difference over time and across groups becomes statistically insignificant

estimating dynamic demand for cigarettes using panel data the effects of bootlegging taxation and advertising reconsidered abstracct a dynamic demand for cigarette consumption is estimated using pooled data of 46 states over the period 1963 to 1980 a price elasticity of 0 2 and an insignificant income elasticity is found using pooled estimation techniques the bootlegging effect is modeled explicitly using neighboring price the effect is found to be significant two major policy issues are analyzed in light of these new estimates 1 cigarette taxation is found to be an effective tool for generating revenues even though there may be spillover effects to neighboring states where bootlegging is significant 2 the effects of the fairness doctrine act and the advertising ban on cigarette consumption are re examined we find mild support for the effectiveness of subsidized anti smoking messages in reducing cigarette consumption and no support for the thesis that the ban on advertising helps to increase per capita consumption

can economic incentives encourage actual reductions in pesticide use and environmental spillovers chemical pesticides constitute an important input in crop production but their indiscriminate use can impact negatively agricultural productivity human health and the environment recently attention is focused on the use of economic incentives to reduce pesticide use and its related indirect effects the aim of this work is to assess the effectiveness of different economic instruments such as taxes and levies in encouraging farmers to decrease pesticide use and their environmental spillovers a policy simulation model is employed using data from dutch cash crop producers including two pesticide categories that differ in terms of toxicity and pesticides environmental spillovers four different instruments were selected for evaluation pesticide taxes price penalties on pesticides environmental spillovers subsidies and quotas the results of the study indicate that even high taxes and penalties would result in a small decrease in pesticide use and environmental spillovers taxes that differentiate according to toxicity do not lead to substitution of high with low toxicity pesticides subsidies on low toxicity products are not able to affect the use of high toxicity products pesticide quotas are more effective in reducing pesticide use and environmental spillovers

tobacco taxes and health care costs do canadian smokers pay their way through their health care utilization smokers are generally perceived to be imposing a financial externality on non smokers within health insurance systems to investigate the empirical basis for this view we estimated publicly financed health care expenditure attributable to smoking for the canadian province of ontario and compared it to tobacco taxes paid by ontario smokers both initial estimates and the results of sensitivity analyses performed on key assumptions and parameters of the estimation methodology rejected the hypothesized existence of a financial externality arising from smokers health care utilization

the effects of price and smoking risk information on the demand for tobacco in taiwan an empirical study this study evaluates the effects of a cigarette price increase and smoking risk information on tobacco consumption in taiwan tobacco price expenditure and an index of smoking risk information for taiwan were introduced into a central bureau of statistics cbs demand model to estimate several cigarette demand elasticity coefficients according to this model increasing the cigarette price is a more effective means of reducing cigarette consumption than disseminating more risk information in addition we found that a price rise of nt 5 per cigarette pack would cause a reduction in the consumption of domestic and imported cigarettes of 3 23 and 4 86 packs per capita respectively total per capita consumption of cigarettes would be reduced annually by 8 09 packs 7 56 despite this reduction in cigarette consumption the increase in cigarette price would at the same time lead to a significant net increase in tax revenue to the taiwan government

the potential for using excise taxes to reduce smoking we examine the potential for reducing cigarette smoking through increases in cigarette excise taxes by estimating the price elasticity of demand for cigarettes using information on individual smoking behavior from the 1976 health interview survey we estimate the adult price elasticity of demand for cigarettes to be 0 42 we find that price has its greatest effect on the smoking behavior of young males and that it operates primarily on the decision to smoke rather than via adjustments in the quantity of cigarettes smoked an excise tax increase would discourage smoking by successive cohorts of young adults and those reduced smoking levels would be reflected in aggregate smoking as these cohorts mature

competition and the cigarette tv advertising ban competition and the cigarette tv advertising ban i introduction whether advertising increases or decreases competition has been debated for decades on one hand kaldor 1949 50 bain 1956 and others argue that advertising reduces competition by enabling the leading firms in an industry to increase product differentiation this lowers the existing elasticity of demand for the firm s output and erects barriers to the entry of new firms into the industry on the other hand telser 1964 nelson 1975 and others argue that advertising increases competition by disseminating information about the price and other product attributes more widely among consumers this increases the demand elasticities facing the existing firms and facilitates the entry of new firms the results of empirical studies of these alternative theories conflict and so the debate continues 1 empirical studies generally focus on large cross sectional industry samples and compare various measures of competition e g profits industrial concentration or market share stability between high advertising consumer goods industries and low advertising producer goods industries the principal drawback of this approach is that one must control for the many differences among industries in addition to advertising which might affect the proxies for competition the present paper takes a different approach to test the same hypotheses the 1970 ban of cigarette advertising on television can be viewed as a quasi experiment i assume that it substantially reduced the efficacy of cigarette advertising whatever its effects on competition and test for these effects by comparing industry performance measures before and after the ban the results on balance indicate that the ban reduced competition in the cigarette industry ii background in 1970 federal legislation was passed banning the advertising of cigarettes on television and radio effective 2 january 1971 the ban was the result of increasing evidence assumulated during the previous two decades regarding the adverse effects of smoking on health and was not related to considerations of industry competition prior to the ban the cigarette industry was a heavy user of television advertising see table i from 1963 to 1970 the industry s television plus radio advertising to sales ratio averaged 7 4 percent 2 the industry s total advertising to sales ratio during this period averaged 9 8 percent which was among the highest of all industries 3 television advertisements accounted for 76 percent of this total in effect the ban forced the industry to drop its principal advertising medium virtually overnight of course the industry could and did substitute advertising in other media for the lost television advertising however during the first five years after the ban increased spending in other media did not offset the elimination of television advertising expenditures consequently the mean total advertising to sales ratio fell to 6 7 percent during 1971 75 4 these advertising substitutes were qualitatively inferior exacerbating the impact of the spending reductions on efficacy advertising intensity did not approach pre ban levels again until 1976 during 1976 80 the advertising to sales ratio averaged 11 0 percent higher than the mean for the pre ban years 1963 70 5 because the substitutes were inferior to television advertisements the increased advertising expenditure per dollar of sales does not mean that the market impact of advertising was necessarily greater than for the pre ban period 6 it should also be noted that the ban did not cause a decline in industry sales it it had this might have generated its own confounding effects on the performance measures analyzed below total cigarette sales rose from about 470 billion units in 1960 to about 533 billion units in 1970 and about 620 billion units in 1980 a 32 percent increase over 1960

the econometrics of damage control why specification matters the contribution of damage control agents to production differs fundamentally from that of standard inputs lands labor capital this paper develops an econometric model based on the key characteristics of damage control agents and examines its properties it demonstrates that standard production function specifications overestimate damage control agent productivity and have erroneous implications for the evolution of damage control agent productivity and use in response to changing environments e g the spread of pest resistance it also proposes several alternative specifications and discusses methods for estimating them

is addiction rational theory and evidence this paper makes two contributions to the modeling of addiction first we provide new and convincing evidence that smokers are forward looking in their smoking decisions using state excise tax increases that have been legislatively enacted but are not yet effective and monthly data on consumption second we recognize the strong evidence that preferences with respect to smoking are time inconsistent with individuals both not recognizing the true dife culty of quitting and searching for self control devices to help them quit we develop a new model of addictive behavior that takes as its starting point the standard rational addiction model but incorporates time inconsistent preferences this model also exhibits forward looking behavior but it has strikingly different normative implications in this case optimal government policy should depend not only on the externalities that smokers impose on others but also on the internalities imposed by smokers on themselves we estimate that the optimal tax per pack of cigarettes should be at least one dollar higher under our formulation than in the rational addiction case

much ado about nothing smoking bans and germany s hospitality industry over the past years public smoking bans have been introduced in most european countries unlike elsewhere in germany such bans were introduced at state level at different points in time which provides important intra country regional variation that can be exploited to identify the effects of such bans on the hospitality industry using monthly data from a compulsory survey carried out by the german federal statistical office we study the short run effects that these bans had on establishments sales in contrast to the largely us based literature we find that smoke free policies had a negative yet moderate effect on establishment sales closure rates of businesses in the hospitality industry however were not significantly affected by the introduction of state smoking bans

costs of smoking and attempts to quit using recent cross sectional state level data for the us this article examines smoking quitting behaviour by smokers in particular we uniquely focus on how the costs of smoking both direct and indirect costs induce smokers to quit results show that the price of cigarettes and home smoking restrictions are the primary thrusts behind smokers quit decision the indirect costs due to workplace smoking restrictions medical costs and a lack of insurance do not seem to significantly matter the habit forming effect of cigarettes is shown to lead to greater quit attempts policy implications are discussed

differential consumer demand systems it is shown in this paper that several well known systems like the rotterdam model and the almost ideal demand system can be seen as different parametrizations of the budget share differential equation using a third parametrization a new system called the cbs system is developed and discussed special attention is given to the relative price version of the system and in particular to the special case of preference independence some estimates for the netherlands based on time series for 1953 1981 using various approaches are presented

the effectiveness of anti smoking legislation a review abstract this survey focuses on government efforts to curb the use of undesirable goods notably tobacco products we synthesize the economics literature and examine the effectiveness of government curbs on tobacco consumption through non price controls such as bans on cigarette advertising health warnings and workplace smoking bans and price measures or higher prices through higher taxes this literature review is unique in that we do not merely aim to provide a summary of the literature rather our main focus is to draw conclusions from the literature regarding the effectiveness of alternate policy measures across countries in checking smoking and to provide directions suggestions for extending the scope of government intervention to other tobacco products

health behavior health knowledge and schooling the positive correlation between schooling and good health is well documented one explanation is that schooling helps people choose healthier life styles by improving their knowledge of the relationship between health behaviors and health outcomes that is schooling improves the household s allocative efficiency in producing health this empirical study uses direct measures of health knowledge to test this explanation part of the relationship between schooling and the consumption of cigarettes alcohol and exercise is explained by differences in health knowledge however most of schooling s effects on health behavior remain after differences in knowledge are controlled for

information shocks and cigarette addiction views from dynamic panels with common structural changes in this article we attempt to evaluate the impact of various information shocks on cigarette consumption in contrast to the existing studies we do not impose any break points a priori we use recently developed techniques for sample splitting in the data on us cigarette demand and find that using a time index as a transition variable can cluster cigarette demand into four distinct regimes in the past four decades a myopic to rational switch in cigarette consumption behaviour was observed in response to various anti smoking information events in particular we find strong evidence in support of the rational addiction model in the 1980s and 1990s moreover in line with the theoretical prediction our estimate of the long run elasticity is twice as large as the short run elasticity our empirical framework should improve policy makers understanding of the dynamics of cigarette consumption in response to various anti smoking campaigns and stress the role of sound policy making in improving smoking con

taxation or regulation looking for a good anti smoking policy abstract this paper investigates the relative ability of two anti smoking policies taxes and regulation in inducing reductions in cigarette consumption and in providing incentives to stop smoking or not to start to our results based on canadian data show that cigarette demand responds to taxes elasticity of 0 28 but not to regulation while the converse is true for the proportion of smokers in the population

tax harmonisation and the reduction of european smoking rates abstract amidst growing optimism that smoking in europe can be greatly reduced by the year 2000 this paper simulates the possible impacts of european tax harmonisation in the context of rising incomes a range of price and income elasticities are chosen from econometric studies which use micro information this is justified by the aggregation problems associated with studies in the smoking literature which use aggregate data using micro elasticities the simulations reported in this paper show that the aims of fiscal harmonisation are at variance with the aims of health promotion

are cigarette bans really good economic policy this study investigates the quarterly relationship between the quantity of cigarettes sold real disposable income per capita and the relative price level of cigarettes in canada careful attention is paid to the nonstationarity of the data and the dynamic specification of the model it is concluded that cigarette demand is extremely insensitive to price and income changes this is evidence of the large consumer surplus smokers enjoy and the large revenue increasing potential of a cigarette tax increase policy as opposed to cigarette bans

economic evaluation of nutrition policy abstract the good news from prevention research is that it appears possible to dramatically improve health in the us by changing identified risk factors the goal of this paper is to discuss how to evaluate the economic consequences of improvements in nutrition and exercise related health cost benefit analysis and the related tools of cost effectiveness analysis and cost utility analysis are proposed as preferred methods the decision rule is simply if the sum of the potential gains to all those affected by a policy intervention exceed the sum of costs there is a potential gain in societal welfare by this standard preventive interventions can be worthwhile even when they do not reduce lifetime medical expenditures or increase lifetime earnings that is even when the intervention is not a free lunch the distinction between the internal costs for an individual patient versus the external costs an individual s illness imposes on others is an important conceptual issue practical issues include determining whether a poor health habit causes the costs and other results being attributed to it and the completeness of the analysis in principle the analysis should examine all of the effects and resource costs of the intervention including changes in morbidity mortality the quality of life allocations of patient time and caregiving by others as well as traditional health sector costs and changes in productivity improvements in nutrition and exercise related health may also have important implications for public sector finances of programs including medicare and social security

a theory of rational addiction we develop a theory of rational addiction in which rationality means a consistent plan to maximize utility over time strong addiction to a good requires a big effect of past consumption of the good on current consumption such powerful complementarities cause some steady states to be unstable they are an important part of our analysis because even small deviations from the consumption at an unstable steady state can lead to large cumulative rises over time in addictive consumption or to rapid falls in consumption to abstention our theory also implies that cold turkey is used to end strong addictions that addicts often go on binges that addicts respond more to permanent than to temporary changes in prices of addictive goods and that anxiety and tensions can precipitate an addiction

smart policies to reduce pesticide use and avoid income trade offs an agent based model applied to thai agriculture abstract policy makers in developing countries need better evidence of how changes in pesticide regulation would affect pesticide reduction and farm incomes but there are very few modeling tools that can provide such information the present study develops a new model based on mathematical programming based multi agent system mpmas a simulation software that allows assessing ex ante the impact of alternative pesticide use reduction strategies including combinations of pesticide taxes the introduction of integrated pest management a price premium for safe agricultural produce and subsidies for biopesticides the model is parameterized with farm and plot level data from northern of thailand where the adoption of high value cash crops has been accompanied by a rapid increase in synthetic pesticide use simulation results suggest that a pesticide tax alone has little effect on synthetic pesticide use a smart policy package combining integrated pest management a progressive pesticide tax based on toxicity and subsidies lowering the price of biopesticides can reduce average use of hazardous pesticides by 34 over current levels without adverse effects on the average farm income

education market rigidities and growth the paper exploits macro panel data for oecd countries close to the technological frontier the education level product market rigidities and employment protection legislation would be significantly related to tfp growth with a substantial contribution of the interaction between market rigidities

modeling the length and shape of the r d lag an application to uk agricultural productivity this article updates total factor productivity tfp growth in uk agriculture from 1953 2005 and shows that public and private research and returns to scale explain tfp cointegration and causality tests are used to investigate the validity of attempts to explain uk agricultural productivity with r d and related technology variables then the length and shape of the lag structures are modeled and compared with the structures that are commonly imposed on the data the rates of return ror to r d using the data determined lags differ considerably from those obtained by imposing lag shapes these comparisons show that the ror to public r d are sensitive to the lag shape as well as its length and that the omission of other technology variables such as mechanical and chemical patents pertaining to agriculture and farm size can bias the ror

simple econometrics of pesticide productivity this paper develops a multioutput generalization of the lichtenberg zilberman damage control technology the dual representation of the technology is shown to be conditionally additive in the price of abatement activities and other prices an econometric procedure for estimating the dual technology is developed and applied to an aggregate u s agricultural data set the conditionally additive nature of the model allows estimation of pest damage from the dual technology our estimates of aggregate u s pest damage are much lower than previous estimates

estimating price elasticities when there is smuggling the sensitivity of smoking to price in canada a central parameter for evaluating tax policies is the price elasticity of demand for cigarettes but in many countries this parameter is difficult to estimate reliably due to widespread smuggling which significantly biases estimates using legal sales data an excellent example is canada where widespread smuggling in the early 1990s in response to large tax increases biases upwards the response of legal cigarette sales to price we surmount this problem through two approaches excluding the provinces and years where smuggling was greatest and using household level expenditure data on smoking these two approaches yield a tightly estimated elasticity in the range of 0 45 to 0 47 we also show that the sensitivity of smoking to price is much larger among lower income canadians in the context of recent behavioral models of smoking whereby higher taxes reduce unwanted smoking among price sensitive populations this finding suggests that cigarette taxes may not be as regressive as previously suggested finally we show that price increases on cigarettes do not increase and may actually decrease consumption of alcohol as a result smuggling of cigarettes may have raised consumption of alcohol as well

is labour rigidity harming europe s competitiveness the effect of job protection on the pattern of trade and welfare abstract we develop a model to analyse the implications of firing costs on international specialization to avoid paying the firing cost the country with a rigid labor market will tend to produce relatively secure goods at a late stage of their product life cycle an international product cycle emerges where new goods are first produced in the low firing cost country and then move to the high firing cost country an increase in firing costs in the high firing cost country lowers welfare there and increases welfare in the low firing cost country it also narrows the range of goods produced by the high firing cost country biasing its specialization towards more mature goods

macroeconomic effects of regulation and deregulation in goods and labor markets product and labor market deregulation reduce and redistribute rents leading economic players to adjust to this new distribution it typically comes with distribution and dynamic effects to study these effects we build a macroeconomic model on two central assumptions monopolistic competition in the goods market which determines the size of rents and bargaining in the labor market which determines the distribution of rents product market regulation determines entry costs and the degree of competition labor market regulation determines the bargaining power of workers we show the effects of deregulation we then use our results to discuss the political economy of deregulation and recent macroeconomic evolutions in europe

does fdi increase productivity the role of regulation in upstream industries in view of substantial changes having taken place in the regulatory environment and in the light of the increasing role of inter industry linkages we examine whether the total factor productivity tfp growth impact of foreign direct investment fdi is determined by regulation in upstream sectors econometric estimates illustrate that fdi exerts a positive impact on the growth of oecd industries which slows down as upstream regulation rises to raise the reliability of our estimates we use instruments for fdi and regulation that are as free as possible of endogenous association with tfp growth our instrumental variable estimates verify that the influence of fdi on tfp growth depends negatively on the level of upstream regulation non parametric estimates confirm that the highest impact of fdi takes place at the lowest levels of entry regulation and public ownership

health risk and the decision to quit smoking this study contributes to the understanding of the decision to quit smoking by taking into account the learning of new risk information the specific hypothesis tested is that smokers learn new risk information and hence create an incentive to quit from their own experience probit models are estimated for the decision to quit smoking based on longitudinal data obtained from taiwan it is shown that health risk measured by the observed change in health status over the period between two surveys has a relatively substantial positive effect on the probability of quitting smoking in addition the results indicate that schooling has a significantly positive effect on the probability of quitting these findings are consistent with the predictions of a bayesian learning framework and suggest that the risk information obtained from individual experience which is the sole source of information available to smokers in most developing countries plays the same role that public information does

trends in structural productivity levels in the major industrialized countries abstract estimating returns to hours worked and the employment rate provides us with an original interpretation of changes in us productivity and other industrialized countries catch up with us productivity levels over recent decades

cigarette demand health scares and education in turkey the purpose of this paper is to examine the demand characteristics of cigarettes in turkey aggregate time series date for the 1960 88 period are used in estimation income and price elasticities of cigarette demand are obtained the effect of health warning is estimated to reduce cigarette consumption by about 8 since the inception of warnings in 1982 imports of cigarettes have been allowed since 1984 in addition to advertising of cigarettes in the non electronic media the effect of health warnings are found to be stronger than the opposing effect of advertising the results also suggest that public education about adverse health effects of smoking may be more effective in reducing consumption and less regressive on consumer incomes than raising the price of cigarettes

the effects of an anti smoking campaign on cigarette consumption empirical evidence from greece 1987 the effects of an anti smoking campaign on cigarette consumption empirical evidence from greece applied economics vol 19 no 3 pp 323 329

pesticide taxation and multi objective policy making farm modelling to evaluate profit environment trade offs abstract many countries in western europe have introduced voluntary programmes to encourage farmers to adopt environmentally more benign practices such as integrated pest management but more policy action appears to be needed to meet the environmental quality levels now demanded input taxes could assist in meeting policy objectives the issue considered here is the identification of the most appropriate specification of a tax instrument to reduce the environmental problems of agricultural pesticide usage this paper takes a farm systems approach to evaluation a case study illustration is given for a specialist arable farm in the uk combining an economic model of land use and production with a set of environmental indicators for pesticides linking these two components allows the identification of the potential trade offs between achieving reductions in the environmental burden to a number of ecological dimensions and farm income different pesticide tax specifications vary in both the magnitude and the direction of their impacts the results of the model indicate that either compromises will have to be made in environmental policy or additional instruments will be required to counter act the negative side effects of some instruments

cigarette consumption in spain empirical evidence and implications for public health policy the partial adjustment habit persistence model is used to analyse the behaviour of the demand for cigarettes in spain over the period from 1964 to 1988 on that basis the short and long run elasticities of demand with respect to price income and advertising intensity are estimated the model also provides and estimation of the effects that the anti smoking policies implemented during the period might have had on consumption the results are used to anticipate the probable impact on sales of a total ban on advertising and to design a suitable method to finance a health education campaign about the risks of smoking

smoking initiation and the iron law of demand we show with three longitudinal datasets that cigarette taxes and prices affect smoking initiation decisions evidence from longitudinal studies is mixed but generally find that initiation does not vary with price or tax we show that the lack of statistical significance partly results because of limited policy variation in the time periods studied truncated behavioral windows or mis assignment of price and tax rates in retrospective data which occurs when one has no information about respondents prior state or region of residence our findings highlight issues relevant to initiation behavior generally particularly those for which individuals responses to policy changes may be noisy or small in magnitude

the effects of excise taxes and regulations on cigarette smoking abstract we estimate a generalized linear model to examine adult and teenage cigarette demand our analysis focuses on the extent to which exice taxes and regulations restricting smoking in public places affect cigarette consumption the adult results indicate that the price elasticity of demand is unstable over time ranging from 0 06 in 1970 to 0 23 in 1985 these estimates are lower than most found in previous studies the teenage price elasticity does not differ statistically from the estimates for adults additionally regulations restricting smoking in public places have a significant effect on both adult and teenage cigarette demand

the effect of advertising on total consumption of cigarettes in the u k a comment abstract the premise that there is a link between the volume of cigarette advertising and the total cigarette consumption is examined in this study with reference to two previous studies done by mcguinness and cowling and metra consulting group ltd the relationship between cigarette advertising and cigarette consumption was tested by using econometric and statistical methods the model tested had a reasonably high level of explanatory power in terms of accounting for changes in cigarette consumption over the studied period statistical analysis of the situation revealed a stable positive and significant relationship between sales and media advertising of cigarettes

taxation smuggling and demand for cigarettes in canada evidence from time series data abstract this study analyzes canadian cigarette consumption and taxation between 1980 and 1994 a period in which there have been large price rises and declines and a dramatic increase in the consumption of contraband tobacco products we examine elasticities of legal cigarette sales and total sales including contraband with respect to the price of legal cigarettes and various other factors the growth of the contraband market since 1987 appears to have created two classes of cigarette taxed and untaxed with responses to changes in the legal price that are respectively higher and lower than was previously the case the sensitivity of total cigarette sales to the taxation instrument is much lower than it would appear from sales of taxed cigarettes alone

regulation and productivity performance the paper reviews theory and evidence on the ways in which regulation affects productivity outcomes in a context of endogenous growth it is argued that traditional measures of compliance costs miss the potentially most important impacts of regulation on productivity which occur through changes in incentives to invest and to innovate recent attempts to measure cross country variations in the strength of product market and employment regulation are considered and some weaknesses are highlighted nevertheless consistent with endogenous growth models there appears to he quite strong evidence that regulations which inhibit entry into product markets have an adverse effect on tfp growth in oecd countries although there are some discrepancies in the evidence on most measures the uk appears lightly regulated relative to france and germany and this may have contributed to a reduction in the recent past in the uk s tfp gap

kalman filter and the demand for cigarettes kalman filter estimates of price income and advertising elasticities are presented an analysis of structural change in the demand for cigarettes in the us for the period 1929 86 is made estimated price and income elasticities are generally smaller and the advertising elasticity larger than estimates previously found cigarette demand is inelastic with respect to price and income and advertising elasticity is statistically insignificant for the most part furthermore both income and price elasticities decline over time while advertising elasticity tends to rise four time periods where structural change has occurred are identified the health scare reports and the fairness doctrine act have a significant impact on per capita cigarette consumption

the stability of cigarette demand the relative effects of various governmental interventions upon cigarette consumption is important to policy makers historically the demand for cigarettes has been quite unstable previous studie

the duration of the smoking habit i introduction most smokers smoke out of habit once the habit is ended many of smoking s most harmful effects decline rather quickly preventing and ending cigarette addiction is therefore the straightest path toward preventing the health damage done by cigarette smoking consequently the related questions of why people start smoking and why they quit are central to formulating and evaluating effective antismoking policies duration or hazard models are designed to measure the probability of transition between states and are thus ideal for investigating the structural determinants of the transition between addiction and non addiction nevertheless most previous work in the economics literature uses the aggregate smoking participation rate defined as the percentage of people who currently smoke or an individual s probability of participation rather than a hazard rate to measure the attractiveness of habitual smoking this paper models the hazard rates of both starting and quitting the cigarette smoking habit the starting hazard rate is the probability that an individual will start smoking in a given time period conditional on being a nonsmoker until then the quitting hazard rate is the probability of quitting smoking in a given time period conditional on being a smoker since the starting date both of these rates should rise and fall in response to changes in the attractiveness of smoking the two rates will respond differently to different stimuli since the starting hazard reflects the point of view of nonsmokers and the quitting hazard reflects the point of view of smokers hazard or duration models possess several advantages over smoking participation models most obviously smoking participation rates cannot directly distinguish between increased starting rates and decreased quitting rates but the hazard models can also in a participation rate model it is difficult to control for the effect of the duration of the habit whereas duration models are designed specifically to allow for and measure the dependence of the hazard rate on duration another advantage is that the participation rate at any one time will oversample the number of long term smokers relative to those who had a short term habit whereas a duration model is designed to avoid this source of bias one drawback however is that because of their inherent panel nature the data requirements of duration models are somewhat more difficult to satisfy as shall be seen the only previous work in the economics literature that estimates the hazard rate of starting smoking is douglas and hariharan 1994 my paper improves upon douglas and hariharan in at least three important ways first it estimates the hazard rate of quitting smoking as well as that of starting second it takes into account variation in state level regulation third its time varying covariate model allows hazard rates to respond dynamically to changes in cigarette price regulation and information variables the use of time varying covariates is important because it brings the empirical model into much closer accord with theory the decision whether or not to start or quit smoking is an ongoing decision made one day at a time on the basis of current information the hazard of starting is greatest when the cost of the habit appears lowest and its benefit appears highest this comparison of cost and benefit changes through time as price information income and life cycle variables change while douglas and hariharan 1994 used price information from the potential smoker s most vulnerable age on the theory that its marginal effect is greatest at that time the model used in this paper allows each individual s hazard rate to respond to changes in price and public information as they occur the leading theoretical model of the decision to smoke is the rational addiction model of becker and murphy 1988 which assumes that consumers of addictive goods begin smoking only after fully weighing the costs and benefits of the habit

demand for cigarettes in the united states effects of prices in bordering states and contiguity with mexico and canada based on a cross section of us states for 2004 this article estimates a demand function for cigarettes after including a proxy for prices in the bordering states and simple proxies for contiguity with mexico and canada and for being a major tobacco producer one major point seems to be that the negative elasticity for within state price is similar in magnitude to the positive elasticity for the lowest price in bordering states several additional points also seem noteworthy first having a border with mexico lowers sales in the state sizably second the share of hispanic latino population in the state also lowers sales significantly third contiguity with canada appears to have no significant effect fourth partial impact of the state being a major tobacco producer appears minor even though consumption in these states is considerably higher fifth education shows the expected negative association with cigarette consumption but its statistical significance is low last income carries a weak negat

health scare excise taxes and advertising ban in the cigarette demand and supply the cigarette industry is a fascinating laboratory for industrial economists because of its concentrated market structure and history of conflicts over health and tax issues the industry has been the focal point of many economic studies most of the recent studies have concentrated on the demand side of the market for example bass schmalensee hamilton and fujii deal with the impact of advertising and the health scare on cigarette demand 4 15 10 8 barzel johnson and sumner ward assessed the importance of the excise tax or ad valorem tax on consumers cigarette demand 3 12 16 on the supply side vernon rives naylor developed an econometric model of the tobacco industry 20 which however is more concerned with the agricultural aspects of the product than the industry s market organization a careful review of the above studies suggests serious shortcomings which appear to limit their application to policy formulation or market analysis first the variables are introduced in an ad hoc fashion without reference to existing demand or supply theories second none of the above studies recognizes explicitly the interactions among the variables in the demand and the supply equations in the context of the determination of market equilibrium this paper has three objectives 1 to apply the standard neoclassical market theory to the cigarette industry 2 to identify the interactions between cigarette demand and supply using a simultaneous equations approach the first such attempt in a cigarette industry study and 3 to evaluate the effects of cigarette taxes advertising and health scare issues on the industry s output based on the empirical results obtained from the simultaneous equations analysis the judicious selection of explanatory variables careful data

damage control econometrics functional specification and pesticide productivity empirical studies of pesticide productivity have often concluded that the value of marginal product of pesticide exceeds marginal factor cost despite anecdotal and other evidence to the contrary this article presents estimates of pesticide productivity derived from alternative functional specifications of pesticide involvement in production results suggest that explanation of the magnitude of pesticide productivity estimates obtained in empirical studies may lie somewhere other than with functional specification

cigarette tax economic welfare and social class patterns of smoking the divergence in social class patterns of smoking in the last two decades means that now only half as many professional men social class 1 smoke as do unskilled working men social class 5 and mortality from smoking related disease is becoming predominantly a lower social class problem the changes in smoking patterns have been attributed to the greater influence of antismoking publicity in the higher social classes while the influence on social class smoking of other factors such as taxation or advertising has been largely unknown this study presents a method for assessing the impact of cigarette tax on members of different social classes responses to tax changes over 17 years are analysed and a method developed for estimating the effects of price changes on tax paid expenditure on cigarettes and economic welfare the results suggest that smokers of lower social class may be more responsive to tax changes and that cigarette tax increases may not be regressive cigarette prices in the uk are still some 25 below the 1948 real price level the downward drift in prices may have effectively increased the smoking levels of lower socioeconomic groups relative to social classes 1 and 2 and may have been a major factor in the divergence in social class smoking i smoking profiles the united kingdom stin experiences high smoking levels about 3 4 of all consumer expenditure is spent on tobacco central statistical office 1982 and this represents the highest per capita consumption in the european economic community commission of the european communities 1982 it is by no means evenly spread throughout the population but is mostly concentrated in the lower social class groups opcs 1982 before the anti smoking health publicity of the early 19605 there was very little difference between the smoking habits of different social classes in the uk around 60 of men and 45 of women in each class smoked cigarettes fig 1 since that time the pattern of smoking has been characterized by a widening divergence in smoking between members of different social classes an overall increase in the number of cigarettes smoked by the average smoker and a narrowing of the difference in women and men s smoking habits by 198549 0 of unskilled working men sc5 smoked cigarettes while only

anti smoking publicity taxation and the demand for cigarettes this study demonstrates that anti smoking publicity in the mass media in switzerland has had a substantial permanent impact on cigarette consumption extended publicity following the 1964 u s surgeon general s report accompanying various tax increases and preceding a public vote on an advertising ban for tobacco products decreased consumption permanently by 11 in addition publicity had important indirect effects which are reflected in smokers strong reactions to nominal cigarette price increases estimated nominal cigarette price elasticity is 1 0 by contrast real cigarette prices failed to be significant thus publicity in the mass media provides a powerful tool for deterring cigarette consumption

taxation regulation and addiction a demand function for cigarettes based on time series evidence this work analyzes the effects of prices taxes income and anti smoking regulations on the consumption of cigarettes in california a 25 cent per pack state tax increase in 1989 enhances the usefulness of this exercise analysis is based on monthly time series data for 1980 through 1990 results show a price elasticity of demand for cigarettes in the short run of 0 3 to 0 5 at mean data values and 0 5 to 0 6 in the long run we find at least some support for two further hypotheses that antismoking regulations reduce cigarette consumption and that consumers behave consistently with the model of rational addiction

the transatlantic productivity gap a survey of the main causes abstract during the last 2 decades europe s economy experienced a productivity slowdown whereas the united states us economy exhibited a marked acceleration the result is that since the early 1990s the relative productivity levels between the two regions have continuously diverged leading to a transatlantic productivity gap much of the explanation for this is the strong performance of the us in the so called new economy or knowledge economy and in particular the underinvestment in r d and as a result productivity and innovation has been at the forefront in the european policy agenda however various explanations for the us european union transatlantic productivity gap suggest that the picture is rather more complex than simply the effects on or the result of particular technology driven sectors

age dependency and labour productivity divergence abstractthis study finds strong empirical evidence in favour of the hypothesis that the age composition of population matters for labour productivity growth we applied the fixed effects panel model using data on a large number of countries over the period 1980 2010 our results suggest that higher age dependency not only directly impacts negatively on labour productivity but also modifies the impact of other determinants of labour productivity child dependency has a more adverse effect on labour productivity than old age dependency we specifically find that the marginal effects of gross capital formation information and communication improvement and labour market reforms are significant at lower levels of age dependency however the marginal effect of savings on labour productivity is high at a high level of age dependency the impact of age dependency varies between developed and developing economies diversity in the size and nature of age dependency across regions and different income groups help