This study develops a conceptual framework based on the random utility model to estimate smokers' willingness to pay (WTP) for the hypothetical low-lung-cancer-risk cigarettes in Taiwan. Following the approach taken by Viscusi (J Polit Econ 1990; 98: 1253-1269), an individual's subjective risk perception on the probability of developing lung cancer from smoking cigarettes was measured and used in the estimation of demand for safer cigarettes. Other factors that may affect a smoker's purchase decision toward the hypothetically safer cigarettes are also identified. The average WTP for one pack of low-lung-cancer-risk Cigarettes is estimated to be NT$44.15, which represents a 152% price increase over the average price of cigarettes currently sold in the market. Copyright (C) 2004 John Wiley Sons, Ltd.
