Are cigarette bans really good economic policy?

This study investigates the quarterly relationship between the quantity of cigarettes sold, real disposable income per capita, and the relative price level of cigarettes in Canada. Careful attention is paid to the nonstationa rity of the data and the dynamic specification of the model. It is conclude d that cigarette demand is extremely insensitive to price and income change s. This is evidence of the large consumer surplus smokers enjoy and the lar ge revenue increasing potential of a cigarette tax increase policy, as oppo sed to cigarette bans.