ABSTRACT
This chapter focuses on the cross-effects between cigarettes and other products. The correlation between cigarette smoking and smokeless tobacco use for men among the states is only 0.26, for women it is even lower. Income has a negative influence on the prevalence of cigarettes, although the effect is marginally statistically significant only in the case of youth. The cross-tax elasticity suggests the substitution between cigarettes and smokeless tobacco and reinforces the case for a comprehensive tax policy covering all related tobacco products. The cigarette tax increase, due to the positive cross-price elasticity with smokeless tobacco, could negate the intended effects of the state-level policy. Taxes on both cigarettes and smokeless tobacco did not seem to have a perceptible impact on the prevalence of smoking. Cross-price effects between alcohol and tobacco have profound implications for tax policy coordination. The demand relation specified the prevalence of a tobacco type as a function of own tax, and tax on the other tobacco product.
