sold in Moldova how many were actually consumed and how many were smuggled and sold in other countries. Price differentials between neighboring countries and other EU countries provide incentives for Moldovan cigarettes to be smuggled to countries like Romania, Ukraine, Ireland, Luxembourg and the United Kingdom[29]. Therefore, household surveys could potentially better reflect the total amount consumed and prices effectively paid.

Yet, these surveys present other problems. Surveys are affected by national macroeconomic deterrents of consumption, such as reductions in national production or imports, advertisement, or sales restrictions.[10] To control for these problems, the study examined national data on tobacco production, tobacco regulation, inflation, and macroeconomic shocks during the period of analysis. Another advantage of surveys is that one may detect the price paid by consumers and account for promotions and sales. Nonetheless, this estimation of the price paid is tied to certain endogeneity concerns because heavy smokers may consume cheaper brands, buy greater quantities, shop at lower-priced retailers, engage in tax-avoiding behaviors, and take advantage of promotions more regularly than less habitual smokers.[10] Moreover, in household surveys, one household member typically responds to the survey for the household. The accuracy of the survey thus depends on how well informed the individual is about consumption expenditures and quantities purchased by other household members.[10] Despite all the limitations, the use of household surveys to calculate price elasticities is a common practice that has been used in Australia, Canada, India, the United States, and elsewhere.[10,11,34–36] The study, vigilant to these considerations, calculated the price elasticity of tobacco. It used the inflation rate provided by the National Bureau of Statistics to obtain the real prices paid by consumers (table 2).

**Table 2 – Inflation Index**

|_Indicator_|_2012_|_2013_|_2014_|_2015_|
|---|---|---|---|---|
|Consumer price index|100|104.6|109.9|120.6|

_Source:_ Data of the National Bureau of Statistics.

Using the inflation and the national budget survey, the study calculated the real prices of cigarettes paid by consumers in Moldova (table 3). Table 3 shows prices paid for cigarettes by income decile, after eliminating outliers. In line with the literature, we can see an important difference of prices paid for cigarettes in each income decile. This important variance is related to the prices of cigarettes inside the country. For example, in 2015 a package of non-filtered Astru cigarettes could cost 4 MDL, while a package of Marlboro could cost 22 MDL, a pack of Winston 20 MDL and a pack of Montecarlo 15 MDL[29].

**Table 3 – Estimated Real Prices Paid per 20 Cigarette Package by Decile**

Real Average Prices Paid for

||2012||2013||2014||2015||
|---|---|---|---|---|---|---|---|---|
|Decile|Average|SE|Average|SE|Average|SE|Average|SE|
|1|4.25|0.17|4.05|0.16|5.95|0.39|5.61|0.25|
|2|5.00|0.20|4.96|0.25|5.92|0.40|6.43|0.32|
|3|5.13|0.29|5.62|0.37|6.34|0.31|6.60|0.30|
|4|5.16|0.25|5.72|0.32|6.29|0.33|7.06|0.34|
|5|5.10|0.23|6.53|0.38|5.82|0.41|7.68|0.43|
|6|6.69|0.44|6.15|0.40|7.12|0.42|7.51|0.40|
|7|6.55|0.42|6.84|0.46|7.22|0.37|8.80|0.45|
|8|6.79|0.35|7.18|0.35|8.37|0.51|9.09|0.42|
|9|7.66|0.38|7.49|0.32|9.17|0.38|9.56|0.39|
|10|9.49|0.32|9.49|0.40|9.93|0.38|11.63|0.35|

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