The study looked at how different types of taxes on cigarettes affect prices, government revenues, and smoking rates in 21 EU countries from 1998 to 2007. They found that countries with more ad valorem tax have bigger price differences between expensive and cheap cigarettes. Increasing the ad valorem tax share by 10% raises the price gap by 4 to 5%. Unstable government revenues from cigarette taxes are linked to more ad valorem tax and stronger market power for manufacturers. Using a specific tax more heavily reduces smoking rates, but this effect weakens as manufacturers gain more power.