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- Title
Making a Smooth Exit? Menthol Bans and Cigarette Sales in Massachusetts.
- Authors
Goli, Ali; Mummalaneni, Simha; Chintagunta, Pradeep K.
- Abstract
Bans on menthol cigarettes are ineffective if consumers can bypass them. Taxes might be better because they reduce smoking and generate more tax revenue. Public health regulators in the United States are currently advocating for a ban on menthol-flavored cigarettes because they are believed to be more dangerous than traditional nonmenthol cigarettes. However, these bans will have limited benefits if consumers are able to circumvent them. We examine this issue by evaluating the effects of a statewide menthol ban that was instituted by Massachusetts in 2020. An examination of store-level retail sales data from Massachusetts indicates that some demand shifted from menthols to nonmenthols after the ban was instituted, thereby supporting the goals of the ban. However, broadening our analysis to neighboring states shows a sharp increase in menthol sales in areas just outside the Massachusetts border, thereby suggesting that many Massachusetts residents were able to get around the ban by engaging in cross-state shopping for menthol cigarettes. This cross-state shopping is damaging because it reduces the tax revenue for Massachusetts while also not yielding any positive public health benefits among its population. To provide policy makers with guidance regarding the benefits of alternative policies, we develop and estimate a structural model that accounts for heterogeneity in (i) prices across states, (ii) distances from state borders, and (iii) menthol shares across Massachusetts. We show that a statewide menthol tax might be preferable over either a statewide menthol ban or a national ban because it yields sizable reductions in smoking activity while also generating up to 14% in additional tax revenue. History: Catherine Tucker served as the senior editor. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mksc.2022.0361.
- Subjects
MASSACHUSETTS; MENTHOL; CIGARETTES; TOBACCO taxes; RETAIL industry; CIGARETTE tax; INTERNAL revenue; STRUCTURAL models; PRICES
- Publication
Marketing Science, 2024, Vol 43, Issue 3, p564
- ISSN
0732-2399
- Publication type
Article
- DOI
10.1287/mksc.2022.0361