The quadratic AIDS own-price elasticities are higher than those estimated in the literature on Bangladesh. One disadvantage of this approach is that the elasticities are estimated using a crosssection with information on household consumption. In addition, this approach does not rely on time variation in prices to identify the elasticities. Another caveat derives from the use of unit values as the source of price information. However, one advantage of this approach is that it models simultaneously the demand for various tobacco products and also considers cross-price effects in the impact analysis. By jointly modeling the demand for various tobacco products, one considers responses for a larger population (65 percent of households consuming tobacco), compared with the more restricted population of cigarette consumers (29 percent).<sup>14</sup> This also explains why the estimated own-price elasticities are higher than in other studies: this estimation captures variations across households that do not include cigarette smokers. In this sense, the estimates are more closely aligned with estimates produced using models that attempt to measure longer-term elasticities, such as those of Aloui (2003) for Morocco and van Walbeek (2002) in South Africa (table 2). Yet, the estimates are still higher than those previously generated on Bangladesh; these elasticities are thus used as an upper bound in the analysis.

In terms of cross-price elasticities, there is limited evidence for comparison. John (2008) finds evidence that bidis and cigarettes are complements rather than substitutes in India and that most cross-price elasticities across tobacco products are statistically insignificant. Guindon et al. (2011) find that poor and rural households in India substitute bidis for cigarettes, while richer households tend to consume them together as complements. Elasticity estimates based on HIES data also point to small cross-price elasticities. The cross-price elasticities for cigarettes and bidis are about 10 percent and show almost no variation across deciles. This is consistent with the anecdotal evidence indicating that, culturally, there is not much substitution back to bidis from cigarettes, but that, among some households, there may be a small switch back to bidis if cigarette prices rise substantially.<sup>15</sup> Table 3 summarizes the elasticity estimates across deciles used in the simulations. Three scenarios are compared. The first scenario assumes that households do not respond to the changes in prices, which implies a zero-price elasticity for cigarettes. The second scenario relies on estimates produced by Nargis et al. (2014) using individual data from wave 1 (2009) and wave 2 (2010) of the International Tobacco Control Bangladesh Survey. The last scenario relies on the quadratic AIDS model based on HIES 2016/17 that considers cross-price effects between cigarettes and bidis.

> 14 The approach still conditions the sample on households that consume some form of tobacco. This exclusion would downward bias the estimated elasticities.

> 15 The HIES does not allow consumption to be separated by the type of cigarettes. Therefore, we cannot estimate crossprice elasticities by cigarette brands. This is a drawback of the analysis, as there has been significant downward switching to low-tier cigarette brands in the last decade, suggesting substitution of cheaper cigarette brands for expensive ones.

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