It does a bit of both. Cigarettes become both more expensive for everyone, and there exists incentive for a black market which is necessarily cheaper than the l

It does a bit of both. Cigarettes become both more expensive for everyone, and there exists incentive for a black market which is necessarily cheaper than the legitimate market (otherwise why have it?), but still more expensive than a tax-free market (you can't reach the same efficiency as a legal, tax-free market).