Cigarette and Alcohol Expenditures in Malaysia: Implications for Anti‐Smoking and Drinking Policies*

A number of studies have examined alcohol and cigarette consumption, but none have explored demand for both products simultaneously even though consumption decisions are likely often related. The present study uses microdata from the 2009/2010 Malaysian Household Expenditure Survey. A novel bivariate Tobit model that accounts for error heteroscedasticity is used to estimate Malaysian consumers' decisions to purchase cigarettes and alcohol and amount spent for each. The results indicate that household income and regional location, and the age, gender, education level and occupation type of the household head are associated with consumption decisions and expenditure levels, with some variation by ethnic group, suggesting the importance of these characteristics in policy deliberations to reduce consumption.     

The Effect of Government Advertising Policies on the Market Power of Cigarette Firms

We estimate market power among cigarette manufacturers over 1952–1984, a period of uniform pricing. We apply the Bresnahan approach; adjust it to the firm level; employ a dynamic model with habit persistence; and add an advertising equation, which helps identify the parameters, increase degrees of freedom, and constrain parameters so we can interpret our results at the firm level, despite the fact that the equations conform to what we might see in a market model. We consider effects of government interventions upon demand and market power and find, for instance, that the 1971 broadcast advertising ban decreased market power.