The effect of tobacco prices on consumption: a time series data analysis for Mexico

To estimate the price elasticity of the demand for cigarettes in Mexico based on data sources and a methodology different from the ones used in previous studies on the topic. Quarterly time series of consumption, income and price for the time period 1994 to 2005 were used. A long-run demand model wa...

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Bibliographic Details
Published in:Salud pública de México 2010, Vol.52 Suppl 2, p.S197-S205
Main Authors: Olivera-Chávez, Rosa Itandehui, Cermeño-Bazán, Rodolfo, de Miera-Juárez, Belén Sáenz, Jiménez-Ruiz, Jorge Alberto, Reynales-Shigematsu, Luz Myriam
Format: Article
Language:Spanish
Subjects:
Commerce
Data Interpretation, Statistical
Humans
Mexico
Nicotiana
Smoking - trends
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Summary:To estimate the price elasticity of the demand for cigarettes in Mexico based on data sources and a methodology different from the ones used in previous studies on the topic. Quarterly time series of consumption, income and price for the time period 1994 to 2005 were used. A long-run demand model was estimated using Ordinary Least Squares (OLS) and the existence of a cointegration relationship was investigated. Also, a model using Dinamic Ordinary Least Squares (DOLS) was estimated to correct for potential endogeneity of independent variables and autocorrelation of the residuals. DOLS estimates showed that a 10% increase in cigarette prices could reduce consumption in 2.5% (p
ISSN:1606-7916
DOI:10.1590/S0036-36342010000800015