Interventions to Reduce the Supply of Tobacco
The key intervention on the supply side is the control of smuggling. Recent estimates suggest that 6 to 8 percent of cigarettes consumed globally are smuggled (Merriman, Yurekli, and Chaloupka 2000). Of note, the tobacco industry itself has an economic incentive to smuggle, in part to increase market share and decrease tax rates (Joossens and others 2000; Merriman, Yurekli, and Chaloupka 2000). Although differences in taxes and prices across countries create a motive for smuggling, a recent analysis comparing the degree of corruption in individual countries with price and tax levels found that corruption within countries is a stronger predictor of smuggling than is price (Merriman, Yurekli, and Chaloupka 2000). Several governments are adopting policies aimed at controlling smuggling. In addition to harmonizing price differentials between countries, effective measures include prominent tax stamps and warning labels in local languages, better methods for tracking cigarettes through the distribution chain, aggressive enforcement of antismuggling laws, and stronger penalties for those caught violating these laws (Joossens and others 2000). Recent analysis suggests that, even in the presence of smuggling, tax increases will reduce consumption and increase revenue (Merriman, Yurekli, and Chaloupka 2000).
In contrast to the effectiveness of demand-side interventions, there is much less evidence that interventions aimed at reducing the supply of tobacco products are as effective in reducing cigarette smoking (Jha and Chaloupka 1999, 2000a). The U.S. experience provides mixed evidence about the effectiveness of limiting youth access to tobacco products in reducing youth tobacco use (U.S. DHHS 2000; Woolery, Asma, and Sharp 2000). In addition, the effective implementation and enforcement of these policies may require infrastructure and resources that do not exist in many low- and middle-income countries. A preliminary discussion is occurring in Canada about reducing its number of retail outlets for tobacco from the current 65,000. Neither the effect of such a move nor its enforcement costs are well known. Crop substitution and diversification programs are often proposed as a means of reducing the supply of tobacco. However, little evidence exists that such programs would significantly reduce the supply of tobacco, given that the incentives for growing tobacco tend to attract new farmers who would replace those who abandon tobacco farming (Jacobs and others 2000). Similarly, direct prohibition of tobacco production is not likely to be politically feasible, effective, or economically optimal. Finally, although trade liberalization has contributed to increases in tobacco use (particularly in low- and middle-income countries), restrictions on trade in tobacco and tobacco products that violate international trade agreements or draw retaliatory measures (or both) may be more harmful (Taylor and others 2000).