Cigarette own price elasticities were −0832 in the poorest group and −02645 in the richest group leaf tobacco elasticities were highest in the poorest (−0557) and middle (−04537) groups conclusions poorer group elasticities were the highest, indicating that poorer consumers are more price responsive. Studies of price elasticities in india find that a 10% increase in tobacco prices is estimated to reduce bidi consumption by 91 % and cigarette consumption by 26 %.
Price elasticity estimates for tobacco and other addictive goods in india rijo m johny indira gandhi institute of development research working paper series no wp-2005-003. Objectives the objectives of this study are to: (1) examine the pattern of price elasticity of three major tobacco products ( bidi , cigarette and leaf tobacco) by economic groups of population based on household monthly per capita consumption expenditure in india and (2) assess the effect of tax increases on tobacco consumption and revenue across expenditure groups.
There are a few studies on price elasticities of tobacco products from india john (2008) estimated the price elasticity of demand for three tobacco products (bidis, cigarettes, and leaf tobacco) separately for rural and urban areas in india using the 55th round national sample survey data (1999-2000.
What we price elasticity estimates for tobacco products in india 203 table 3 variability in unit values rural india urban india items sd f-stat f-reg r-sq sd f-stat r-sq f-reg bidi 598 1235 076 7163 563 458 068 2373 cigarette 630 408 081 752 557 282 068 975 leaf tobacco 2066 767 068 3910 2275 572 076 1140 notes: sd refers to 100 times the standard deviation of log unit values calculated over the households reporting positive consumption. Non-cigarette tobacco products accounting for 85% of the tobacco consumption contributes only 15% of the total tobacco taxes though taxation is an important tool to regulate consumption of tobacco, there have been no estimates of price elasticities for different tobacco products in india to date, which can guide tax policy on tobacco. Price elasticity estimates for tobacco products in india rijo m john 0 0 tobacco, bidis, cigarettes, consumption, elasticity, india the tax base of tobacco in india is heavily dependent on about 14% of tobacco users, who smoke cigarettes.
But unlike other countries, tobacco consumption in india is characterized by heavy use of non-cigarette tobacco in the form of bidis2, leaf tobacco etc roughly eighty ve per cent of the tobacco consumption in india is non-cigarette type however, taxation of tobacco products in india is highly skewed towards cigarettes as shown in table 1. Ban on chewable tobacco study on the implications for producers and the supply chain group 10 | marketing research project | november 18, 2012 introduction a food safety and standards authority of india (fssai) regulation issued on august 1, 2011 has recommended a ban on the manufacture, sale and storage of tobacco/nicotine-based pan masala, 1 gutka. The demand for cigarettes and other tobacco products anne-marie perucic tobacco control economics tobacco free initiative tobacco industry is an oligopoly (large number of estimates of price elasticites of cigarette demand in high-income ~ -04.
Estimates of price elasticities showed that the own price elasticity estimates of various addictive goods in india ranged between -05 to -10 with bidis, leaf tobacco and alcohol having elasticities close to unity, cigarettes being the least price elastic of all.
Doi:101093/heapol/czn007 price elasticity estimates for tobacco products in india rijo m john accepted 4 march 2008 the tax base of tobacco in india is heavily dependent on about 14% of tobacco users, who smoke cigarettes.