BACKGROUND: Understanding the price elasticity of demand is critical for assessing the impact of tobacco taxation on consumption. While price elasticity is often assumed to be stable, evidence of its variability in response to tax reforms and price adjustments remains limited. This study evaluates the stability of cigarette price elasticity in Mexico, a country that implemented significant tax reforms and experienced real price declines over the 2008–2022 period.
METHODS: This study analyzes the price elasticity of cigarette demand in Mexico from 2008 to 2022, a period marked by significant tax reforms, price adjustments, and a decline in real cigarette prices. Using nationally representative data, the Deaton model was applied to estimate the elasticity of demand over this period and analyze the potential variations as result of changes in prices and fiscal reforms.
RESULTS: Since 2014, the cigarette price elasticity in Mexico has remained stable despite changes in taxation and real prices. This stability suggests a consistent consumer sensitivity to price changes, with no clear effects before 2014 or across population subgroups, including low-income smokers.
CONCLUSIONS: The stability of price elasticity highlights the potential for tobacco tax policies to maintain their effectiveness in reducing consumption over time. Our findings show that since 2014, the price elasticity of cigarette demand in Mexico has remained stable, with no significant changes despite variations in taxation levels and real prices. These results suggest that consumers consistently respond to price changes, even as market structure and tax reforms fluctuate. This stability allows policymakers, advocates, and researchers to evaluate the impact of tax policies and design more effective interventions. We recommend further research to explore elasticity dynamics in other contexts.