Studies of the impact of tobacco prices on decisions to initiate and quit smoking have, to date, largely been restricted to developed countries. Such analyses, when set in developing countries, are complicated by the availability of a wide range of tobacco products that are nicotine substitutes for cigarettes. This study, which uses data from two rounds of the Vietnam Living Standards Survey in 1992–1993 and 1997–1998, finds evidence of substitution among tobacco products in response to changes in relative prices and points to the need for comprehensive tobacco-control strategies that are not restricted to cigarettes alone. We find that higher cigarette prices may not necessarily encourage quitting and may only divert cigarette smokers to rustic tobacco, which is potentially as harmful to human health as cigarettes. Copyright © 2004 John Wiley & Sons, Ltd.