Adda, Jérôme; Cornaglia, Francesca - Institute for the Study of Labor (IZA) - 2005
This paper analyses the compensatory behavior of smokers. Exploiting data on cotinine concentration - a metabolite of nicotine - measured in a large population of smokers over time, we show that smokers compensate tax hikes by extracting more nicotine per cigarette. Our study makes two important...