Tobacco Oversupply in Paraguay and Its Cross-Border Impacts (Policy Brief)

This Policy Brief was written by the Centro de Análisis y Difusión de la Economía Paraguaya (CADEP) in Paraguay. The policy brief discusses the trends in supply of tobacco compared to trends in consumption. Tobacco consumption in Paraguay has decreased over the last 20 years. Further, the researchers find that a 10% increase in the price of cigarettes reduces consumption by 9.7%. Unlike tobacco consumption, supply increased between 2008 and 2019. The net supply of cigarettes was seven times larger than estimated domestic consumption. This oversupply suggests that illicit cigarettes from Paraguay are being exported to neighboring countries. The policy brief recommends further research on the topic, as well as strengthening the tax administration, and increasing coordination between Paraguay and neighboring countries.