Assessing the demand for cigarettes and e-cigarettes among US adult e-cigarette users: a cross-sectional study using a demand system approach.

Introduction: The rapid growth of electronic cigarette (EC) use in the USA raises questions about their role in harm reduction and interaction with cigarettes. Understanding how adults who use ECs respond to price and expenditure changes is essential for effective tax policy. This study estimates own-price, cross-price and expenditure elasticities for cigarettes and ECs among US adults who use ECs using the Quadratic Almost Ideal Demand System (QUAIDS). Methods: We analysed a nationally representative sample of 771 US adults aged 18 and older who use ECs, including individuals who use both cigarettes and ECs (dual use) and those who use ECs exclusively. Demand for cigarettes and ECs was measured using budget shares from monthly expenditures and unit prices. A QUAIDS framework jointly estimated expenditure, own-price and cross-price elasticities. To address endogeneity, state-level cigarette and EC taxes served as instruments for prices and the tobacco expenditures of other respondents were used to instrument expenditure. Results: Among adults who use ECs, a 10% increase in tobacco expenditure is associated with a 17%-30% higher cigarette consumption and a 5%-8% higher EC consumption. Similarly, a 10% increase in cigarette prices is associated with a 13%-19% lower cigarette consumption while a 10% increase in EC prices is associated with a 7%-10% lower EC consumption. Cross-price elasticities are generally small and not statistically significant, indicating limited evidence that price changes in one product affect consumption of the other. Conclusions: Raising cigarette taxes may be associated with reduced smoking and increased EC use, while higher EC taxes are associated with lower EC consumption without raising smoking. However, additional income is more likely directed to cigarettes, suggesting coordinated taxes on both products may be needed. Future research should assess whether EC taxes raise smoking and whether cigarette taxes promote complete switching to ECs.