Bootleggers, Baptists, and E-Cigarettes

Abstract

Electronic cigarettes pose competitive threats to the makers of traditional cigarettes and nicotine replacement therapies such as nicotine gum and patches. It is no surprise that these producers, and the governments that earn revenue from tobacco taxes, respond by seeking controls on the competition. Similarly, despite evidence that e-cigarettes may be beneficial in helping tobacco smokers quit, assorted public health researchers and groups have attacked e-cigarettes as a health danger. This episode allows application of the Bootlegger and Baptist theory of regulation. Diverse groups, not necessarily working together, and with different motives, share in a goal of limiting how e-cigarettes enter the market. Those who profit from the current tobacco market structure and some health advocates plead for politicians and regulators to restrict the new product.

Keywords: Keywords: tobacco regulation, electronic cigarettes, Baptist and bootlegger, rent-seeking, health regulation

JEL Classification: K23, K32