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- Title
ADVERTISING, HABIT FORMATION, AND U.S. TOBACCO PRODUCT DEMAND.
- Authors
YUQING ZHENG; CHEN ZHEN; NONNEMAKER, JAMES; DENCH, DANIEL
- Abstract
The U.S. tobacco market has experienced a shift toward noncigarette tobacco products. We examined the degree of habit formation and the role of advertising for cigarettes, little cigars/cigarillos, large cigars, e-cigarettes, and smokeless tobacco using market-level scanner data for convenience stores from 2009 to 2013. Results based on a dynamic demand system show that while all tobacco products are habitual, e-cigarettes are the most habitual product. More choices of flavors, less restrictions on its use in public places, less documented harmful effects, and a higher upfront cost might explain the higher degree of habit formation for e-cigarettes. We also find that e-cigarettes did not substitute for or complement cigarettes. The results imply that e-cigarettes may serve as a gateway to nicotine addiction but not necessarily to cigarette smoking. Regarding advertising, cigarette magazine advertising did not affect cigarette demand, while e-cigarette TV advertising increased e-cigarette demand with a positive spillover to cigarette demand. Such results may help explain e-cigarettes' recent success in sales and imply that e-cigarette TV advertising might undermine efforts to reduce cigarette smoking. Advertising was also found to affect the degree of habit formation for cigarettes, large cigars, and e-cigarettes.
- Subjects
HABIT formation; TOBACCO industry; PRODUCT advertising; ELECTRONIC cigarettes; PHYSIOLOGICAL effects of tobacco; ECONOMICS
- Publication
American Journal of Agricultural Economics, 2016, Vol 98, Issue 4, p1038
- ISSN
0002-9092
- Publication type
Article
- DOI
10.1093/ajae/aaw024