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Tobacco price elasticity in Serbia: evidence from a middle-income country with high prevalence and low tobacco prices
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  1. Marko Vladisavljevic,
  2. Jovan Zubović,
  3. Mihajlo Đukić,
  4. Olivera Jovanović
  1. Institute of Economic Sciences, Belgrade, Serbia
  1. Correspondence to Marko Vladisavljevic, Institute of Economic Sciences, Belgrade 11000, Serbia; marko.vladisavljevic{at}ien.bg.ac.rs

Abstract

In this paper, we use Deaton’s demand model and Household Budget Survey data from 2006 to 2017 to provide a first robust and reliable estimate of cigarettes price elasticity for Serbia. The case of Serbia is particularly interesting and important as it provides evidence for a country in which tobacco market is characterised by the high tobacco consumption, low prices and large perceived impact of multinational tobacco companies on public revenues, export and employment, given their considerable cigarette production in Serbia. The price elasticity of cigarettes is estimated at −0.639, in line with the previous estimates for the low-income and middle-income countries. Estimated negative cigarettes price elasticity for Serbia suggests that tobacco tax policy could be used effectively to reduce cigarette consumption in Serbia, which could lower the harmful health effects of cigarettes. Furthermore, a calculation based on the estimated elasticity suggests that increasing tobacco taxes could also have positive fiscal effects, as the expected revenue from the taxes would increase.

  • tobacco consumption
  • price elasticity
  • Deaton’s model
  • Serbia

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Footnotes

  • Funding This research is funded by the University of Illinois at Chicago’s Institute for Health Research and Policy through its partnership with the Bloomberg Philanthropies and the Ministry of Education, Science and Technological Development of Serbia.

  • Competing interests None declared.

  • Patient consent for publication Not required.

  • Provenance and peer review Not commissioned; externally peer reviewed.

  • Data availability statement Data were obtained from the Statistical Office of the Republic of Serbia (SORS) and cannot be shared with third parties, in accordance with the contract signed by the Insititute of Economic Sciences and SORS. The data (described in the paper) can be obtained from the SORS by request.

  • Author note This paper is a result of international research project 'Accelerating progress in taxation of tobacco and tobacco products in low- and middle-income countries'. Authors' research is additionally supported by the Ministry of Education, Science and Technological Development of Serbia.

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