The effects of e-cigarette taxes on e-cigarette prices and tobacco product sales: Evidence from retail panel data

J Health Econ. 2022 Dec:86:102676. doi: 10.1016/j.jhealeco.2022.102676. Epub 2022 Sep 5.


We estimate the effect of e-cigarette tax rates on e-cigarette prices, e-cigarette sales, and sales of other tobacco products using NielsenIQ Retail Scanner data from 2013 to 2019. We find that 90% of e-cigarette taxes are passed on to consumer retail prices. We then estimate reduced form and instrumental variables regressions to examine the effects of e-cigarette and cigarette taxes and prices on sales. We calculate an e-cigarette own-price elasticity of -2.2 and particularly large elasticity of demand for flavored e-cigarettes. Further, we document a cigarette own-price elasticity of -0.4 and positive cross-price elasticities of demand between e-cigarettes and cigarettes, suggesting economic substitution.

Keywords: Cigarettes; Pass-through rate; Regulation; Taxation; e-cigarettes.

Publication types

  • Research Support, N.I.H., Extramural

MeSH terms

  • Commerce
  • Electronic Nicotine Delivery Systems*
  • Humans
  • Marketing
  • Taxes
  • Tobacco Products*