Table 3

Association between cigarette price and minimum price laws: results from Nielsen Retail Scanner Data 2007—2014 (22 markets)

25th price centile
(1)(2)(3)(4)(5)(6)(7)
VariablesBaseline resultNumber of parties regulated >1Total markup across standard distributionCartage applied to base costAny taxes applied to base costOther fees applied to base costState does not allow coupons
Minimum pricing law0.324*** (0.0285)0.445*** (0.0301)0.593*** (0.0437)0.363*** (0.0290)0.509*** (0.0305)0.304*** (0.0301)0.367*** (0.0291)
State cigarette excise tax rate0.00963*** (0.000296)0.0103*** (0.000362)0.00961*** (0.000292)0.00952*** (0.000296)0.0101*** (0.000288)0.00957*** (0.000303)0.0100*** (0.000254)
MPL-component−0.264*** (0.0426)−0.147*** (0.0169)−0.405*** (0.0274)−0.361*** (0.0319)0.134*** (0.0459)−0.249*** (0.0538)
Observations696696696696696696696
R20.8820.8870.8890.8870.8940.8830.886
(9)(10)(11)(12)(13)(14)(15)

Variables
Consumers cannot receive below-cost couponBelow-cost combination sales not allowedTrade discounts may not be usedTrade discount definition does not include buy downs, etcParties may not meet competitor pricingPromotion restrictions applied pre-salePromotion restrictions applied at sale
Minimum pricing law0.367*** (0.0291)0.148*** (0.0355)0.292*** (0.0287)0.585*** (0.0604)0.292*** (0.0287)0.863*** (0.0617)0.118** (0.0553)
State cigarette excise tax rate0.0100*** (0.000254)0.00960*** (0.000298)0.00931*** (0.000305)0.00955*** (0.000300)0.00931*** (0.000305)0.00931*** (0.000305)0.0100*** (0.000254)
MPL-component−0.249*** (0.0538)0.213*** (0.0347)0.570*** (0.0589)−0.280*** (0.0582)0.570*** (0.0589)−0.570*** (0.0589)0.249*** (0.0538)
Observations696696696696696696696
R20.8860.8850.8920.8850.8920.8920.886
50th price centile
(1)(2)(3)(4)(5)(6)(7)

Variables

Baseline Result
Number of Parties Regulated > 1Total Markup Across Standard DistributionCartage Applied to Base CostAny Taxes Applied to Base CostOther Fees Applied to Base CostState Does Not Allow Coupons
Minimum pricing law0.246*** (0.0267)0.406*** (0.0298)0.515*** (0.0419)0.294*** (0.0268)0.466*** (0.0295)0.232*** (0.0287)0.286*** (0.0283)
State cigarette excise tax rate0.0100*** (0.000260)0.0109*** (0.000317)0.0100*** (0.000256)0.00991*** (0.000260)0.0107*** (0.000249)0.0100*** (0.000266)0.0104*** (0.000222)
MPL-component−0.347*** (0.0418)−0.147*** (0.0170)−0.495*** (0.0310)−0.428*** (0.0319)0.0949** (0.0420)−0.227*** (0.0490)
Observations696696696696696696696
R20.9040.9110.9100.9110.9190.9040.907
(9)(10)(11)(12)(13)(14)(15)

Variables
Consumers Cannot Receive Below-Cost CouponBelow-Cost Combination Sales Not AllowedTrade Discounts May Not Be UsedTrade Discount Definition Does Not Include Buy Downs, etcParties May Not Meet Competitor PricingPromotion Restrictions Applied Pre-SalePromotion Restrictions Applied at Sale
Minimum pricing law0.286*** (0.0283)0.0439 (0.0349)0.215*** (0.0269)0.426*** (0.0557)0.215*** (0.0269)0.780*** (0.0554)0.0585 (0.0481)
State cigarette excise tax rate0.0104*** (0.000222)0.0100*** (0.000262)0.00973*** (0.000265)0.00999*** (0.000264)0.00973*** (0.000265)0.00973*** (0.000265)0.0104*** (0.000222)
MPL-component−0.227*** (0.0490)0.245*** (0.0364)0.565*** (0.0540)−0.193*** (0.0551)0.565*** (0.0540)−0.565*** (0.0540)0.227*** (0.0490)
Observations696696696696696696696
R20.9070.9070.9130.9050.9130.9130.907
  • Robust SEs in parentheses.

  • ***p<0.01, **p<0.05, *p<0.1.

  • Promotion Variables Applied Pre-Sale (Trade Discount Used to Reduce Base Cost+Trade Discount Definition Includes Buydowns+State Permits Distributors to Meet Competitor Pricing+State Restricts Meeting of Competitor Pricing).

  • Promotions Applied at Sale (Coupons May Reduce Price Below Cost+Number of Parties Distributing Below-Cost Coupons to Consumer+Below-Cost Combination Sales Allowed+Restrictions on Below-Cost Combination Sales).

  • Control Variables not Shown: Quarter and Year Fixed Effects.