Table 2: Panel fully modified ordinary least squares (FMLOS) estimates and the long-run elasticities.

(a)

Covariates Model 1 Model 2 Model 3 FMOLS coef. -stat OLS coef. -stat FMOLS coef. -stat OLS coef. -stat FMOLS coef. -stat OLS coef. -stat Cigarette price (real) −0.333 13.913 −0.309 10.498 −0.325 13.440 −0.299 10.152 −0.323 13.469 −0.296 10.009 Smokeless tobacco price (real) 0.076 2.881 0.063 2.384 0.070 2.658 0.057 2.168 0.060 2.283 0.046 1.745 Ψ Per capita income (real) −0.00004 4.285 −0.00004 4.590 −0.00004 4.634 −0.00005 5.044 −0.00005 5.288 −0.00005 5.861 Workplace CIAL: percentage of population −0.239 4.702 −0.292 6.220 —   —   —   —   Restaurant CIAL: Percentage of population —   —   −0.159 3.667 –0.171 4.426 —   —   Bar CIAL: percentage of population —   —   —   —   0.080 1.560 (NS) 0.097 2.277 Spring 0.083 3.505 0.073 5.387 0.083 3.466 0.073 5.347 0.083 3.471 0.074 5.392 Summer 0.167 6.906 0.152 10.909 0.168 6.919 0.150 10.789 0.168 6.893 0.150 10.740 Fall 0.073 3.019 0.054 3.893 0.072 2.978 0.053 3.820 0.073 3.002 0.054 3.847 Elasticity Mean     Mean     Mean     Own-price elasticity −0.750     −0.731     −0.727     Cross-price elasticity 0.185     0.171     0.148     Income elasticity −0.895     −0.969     −1.116     CIAL elasticity −0.023     −0.029     0.012     Stationarity tests of FMOLS residuals -bar value     -bar value     -bar value     IPS −2.26 0     −2.226 0     −2.226 0     CADF −2.211 0     −2.171 0.001     −2.231 0

(b)

Covariates Model 4 Model 5 FMOLS coef. -stat OLS coef. -stat FMOLS coef. -stat OLS coef. -stat Cigarette price (real) −0.324 13.389 −0.298 10.140 −0.324 13.493 −0.292 9.895 Smokeless tobacco price (real) 0.068 2.594 0.056 2.120 0.067 2.524 0.052 1.95 Ψ Per capita income (real) −0.00004 4.704 −0.00005 5.095 −0.00005 5.010 −0.00005 5.596 Any CIAL: percentage of population −0.160 3.559 −0.183 4.496 —   — All CIAL: percentage of population —   — −0.092 1.33 Ψ −0.113 1.89 (NS) Spring 0.082 3.458 0.073 5.345 0.083 3.480 0.074 5.374 Summer 0.168 6.922 0.150 10.793 0.166 6.790 0.151 10.757 Fall 0.072 2.973 0.053 3.827 0.073 2.979 0.054 3.856 Price, income, and CIAL elasticities Mean     Mean Own-price elasticity −0.728   −0.729   Cross-price elasticity with smokeless tobacco 0.167   0.163   Income elasticity −0.984   −1.052   CIAL elasticity −0.030 −0.004 Stationarity tests of the FMOLS residuals -bar value     -bar -value IPS −2.255 0   −2.221 0   CADF −2.185 0.001 −2.161 0.002

Note: all models include market-specific intercepts and time trends and year-specific intercepts.IPS denotes the Im et al.[20] test for nonstationarity; CADF denotes Pesaran’s [40] cross-sectionally augmented Dickey-Fuller (CADF) test. The symbol “Ψ” next to the -statistics indicates that the coefficient is not statistically significant at 5% sig.level.