The ojective of this project is to investigate empirically the impact of price (taxes) and other factors on smoking by adults. Particular attention is being paid to accurately measuring the price elasticitiy of demand, a measure of the responsiveness of cigarette consumption to price changes, in the context of a completely specified individual demand equation. Included in these demand relationships will be other characteristics of the individual such as health status, age, sex, income and education. We are using data on individuals from the U.S. Health and Nutrition Survey (HANES) (1971-1975) and the 1976 Health Interview Survey (HIS) combined with information on retail prices to estimate these relationships. Multivariate analysis is being employed, particularly, ordinary least squares regression and its modifications. In order to more adequately estimate the health impact of cigarette tax changes, we will estimate separate demand relationships for individuals depending on the probable health effect of modifying their cigarette consumption. We will estimate the amount of cigarette bootlegging for each state and construct a model of interstate bootlegging as a function of distance and tax differentials. This research will provide empirical estimates of the potential effects of federal, state and local tax policies on cigarette consumption and ultimately health levels. It will also provide needed information on the effect of state tax changes on bootlegging activity.