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Do state minimum markup/price laws work? Evidence from retail scanner data and TUS-CPS.
Jidong Huang1, Jamie F Chriqui2, Hillary DeLong1
1School of Public Health, Georgia State University, Atlanta, USA.
Tobacco Control
|October 5, 2016
Summary
Minimum markup/price laws (MPLs) effectively increase cigarette prices. Further strengthening these laws with higher markup rates and prohibiting discounts can enhance their impact on tobacco control.
Area of Science:
- Public Health
- Health Economics
- Tobacco Control Policy
Background:
- Minimum markup/price laws (MPLs) are proposed non-tax strategies to curb tobacco use.
- Empirical evidence on the effectiveness of MPLs in increasing cigarette prices is limited.
- This study addresses the gap in understanding MPLs' impact on cigarette pricing.
Purpose of the Study:
- To examine the association between minimum markup/price laws (MPLs) and cigarette prices.
- To evaluate the effectiveness of MPLs as a tobacco pricing strategy.
- To identify components of MPLs that influence cigarette prices.
Main Methods:
- Compiled state-level MPLs from legal databases.
- Linked MPL data with cigarette prices from retail scanner and survey data.
- Conducted multivariate regression analyses to assess associations between MPLs and cigarette prices.
Main Results:
- MPLs are associated with significantly higher cigarette prices.
- Prohibiting below-cost sales, trade discounts, competitor price matching, and coupons further increased prices.
- States with total markup rates exceeding 24% showed significantly higher cigarette prices.
Conclusions:
- Minimum markup/price laws (MPLs) are effective in increasing cigarette prices.
- Enhancing MPLs through stricter markup rates and prohibitions on discounts/coupons can amplify their effect.
- MPLs represent a viable policy tool for tobacco price regulation.
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