Abstract
Cross-border sales of cigarettes reduce the revenue from state cigarette taxes. Two Advisory Commission on Inter- governmental Relations (1977, 1985) stud- ies estimate the cross-border effect by comparing their estimates of the response of state cigarette sales to state cigarette taxes to an average of Wiseman (1968) and Lyon and Simon's (1968) estimates of the response of individual consumers to ciga- rette price changes, All three studies use different con trolling variables and data. The present paper measures both re- sponses in the same regression, finding that about four-fifths of the sales response to state cigarette taxes IS due to cross-bor- der sales.
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