How Effective Are Taxes in Reducing Tobacco Consumption

  title={How Effective Are Taxes in Reducing Tobacco Consumption},
  author={Frank J Chaloupka},
Governments have long taxed cigarettes and other tobacco products. Tobacco taxes have been thought to satisfy the Ramsey Rule that states that consumption taxes should be applied to goods with relatively inelastic demands so that welfare losses associated with taxation will be minimized. More recently, many countries have increased tobacco taxes to reduce tobacco use. These tax increases are partly based on efficiency grounds — the idea that tobacco users should bear the full costs of their… 
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