The Economic Impact of State Cigarette Taxes and Smoke-Free Air Policies on Convenience Stores – November 2011

Objectives: To investigate whether increasing state cigarette taxes and/or enacting stronger smoke-free air (SFA) policies have negative impact on convenience store density in a state, a proxy that is determined by store openings and closings, which reflects store profits.

Methods: State-level business count estimates for convenience stores for 50 states and District of Columbia from 1997 to 2009 were analysed using two-way fixed effects regression techniques that control for state-specific and year-specific determinants of convenience store density. The impact of tax and SFA policies was examined using a quasi-experimental research design that exploits changes in cigarette taxes and SFA policies within a state over time.

Results: Taxes are found to be uncorrelated with the density of combined convenience stores and gas stations in a state. Taxes are positively correlated with the density of convenience stores; however, the magnitude of this correlation is small, with a 10% increase in state cigarette taxes associated with a 0.19% (p<0.05) increase in the number of convenience stores per million people in a state. State-level SFA policies do not correlate with convenience store density in a state, regardless whether gas stations were included. These results are robust across different model specifications. In addition, they are robust with regard to the inclusion/exclusion of other state-level tobacco control measures and gasoline prices.

Conclusions: Contrary to tobacco industry and related organisations’ claims, higher cigarette taxes and stronger SFA policies do not negatively affect convenience stores.

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November 2011

Jidong Huang
Frank J Chaloupka