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Internet Diffusion and Implications for Taxation: Evidence from U.S. Cigarette Sales
Author(s) -
Goel Rajeev K.,
Nelson Michael A.
Publication year - 2012
Publication title -
policy and internet
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.281
H-Index - 26
ISSN - 1944-2866
DOI - 10.1515/1944-2866.1159
Subject(s) - the internet , revenue , price elasticity of demand , tax revenue , business , tax policy , advertising , economics , public economics , microeconomics , tax reform , finance , computer science , world wide web
Using state level U.S. data from 1994‐2009, this research examines the impact of the Internet on cigarette demand and discusses resulting implications for tax policy. Results show that the Internet increases the demand price elasticity of cigarettes, which limits the ability of governments to generate additional tax revenues through cigarette tax increases. Further, the smuggling of cigarettes, both across domestic and international borders, remains significant, and tobacco producers and Indian casinos undermine efforts to lower cigarette sales.