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Economic Effects of Smoking Bans on Restaurants and Pubs

5 Pages Posted: 1 Jan 2009  

Barrie Craven

University of Newcastle (Australia) - Newcastle Business School

Michael L. Marlow

affiliation not provided to SSRN

Abstract

The United Kingdom has recently enacted smoking bans in public places such as restaurants and pubs. Public health advocates argue that bans are necessary because non-smokers need protection from second-hand smoke. Advocates also claim that bans do not exert harm on owners because of a vast empirical literature showing that restaurants and bars in the United States never suffer harm following bans. This paper examines whether these claims are true by developing a model within the Coasian framework whereby owners of businesses have incentives to deal with smoking disputes between smokers and non-smokers. Our model demonstrates that it is incorrect to argue that smoking bans are necessary because the private market has no method of attempting to solve smoking problems. It also predicts that bans exert different effects on different businesses: some will be unaffected while others will experience losses or gains. Our literature review reveals that predictions of differential effects are consistent with the empirical evidence.

Suggested Citation

Craven, Barrie and Marlow, Michael L., Economic Effects of Smoking Bans on Restaurants and Pubs. Economic Affairs, Vol. 28, Issue 4, pp. 57-61, December 2008. Available at SSRN: https://ssrn.com/abstract=1319547 or http://dx.doi.org/10.1111/j.1468-0270.2008.00867.x

Barrie Craven (Contact Author)

University of Newcastle (Australia) - Newcastle Business School ( email )

City Campus East – 231
Newcastle-Upon-Tyne NE1 8ST
United Kingdom

Michael L. Marlow

affiliation not provided to SSRN

No Address Available

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