Reservation Prices: An Economic Analysis of Cigarette Purchases on Indian Reservations
April 29, 2014 09:00 AM
Philip DeCicca, McMaster University; Donald Kenkel, Cornell University; and Feng Liu, Shanghai University presented their paper Reservation Prices: An Economic Analysis of Cigarette Purchases on Indian Reservations at the 2013 Fall Research Conference during the session New Evidence of the Policy Impacts on Health Behaviors. It is this week's featured paper from APPAM's Online Paper Collection.
The special legal status of Indian tribes in the U.S. means that state excise taxes are not necessarily collected on cigarette purchases on Indian reservations. We focus on two understudied but basic empirical economic questions this raises. Using novel data from national and New York surveys that asked directly about cigarette prices and purchases from reservations, we ask two questions: What is the economic incidence of the tax break, and has the tax break increased consumer demand for low-quality cigarettes relative to high-quality cigarettes?
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