Impact of Non-Smoking Ordinances on Hospitality Revenues: The Case of Germany

Hamburg Contemporary Economic Discussion Paper No. 26

22 Pages Posted: 11 Dec 2009

See all articles by Gabriel M. Ahlfeldt

Gabriel M. Ahlfeldt

London School of Economics & Political Science (LSE) - Department of Geography and Environment

Wolfgang Maennig

Universität Hamburg, Faculty of Business, Economics and Social Sciences

Multiple version iconThere are 2 versions of this paper

Date Written: June 2009

Abstract

Non-smoking ordinances are among the most popular albeit controversial public health-care legislations worldwide. This article provides an empirical assessment of the impact of non-smoking ordinances on bar and restaurant revenues in German Federal States. By application of panel spline regression and difference-in-difference strategies, we find negative impact limited to bars in the very short run. If any, there is a positive impact on total expenditures in the long run, indicating that either consumption pattern has not changed at all or that any reduction in spending by smokers is compensated for by a corresponding increase by non-smokers. These findings support the German – and similar – non-smoking legislations in the sense that positive externalities resulting from reduced health care cost are likely to outweigh the risk to businesses in the hospitality sector, at least in the long run.

Keywords: Bar Revenues, Non-smoking Ordinances, Restaurant Revenues

JEL Classification: I18, K32

Suggested Citation

Ahlfeldt, Gabriel M. and Maennig, Wolfgang, Impact of Non-Smoking Ordinances on Hospitality Revenues: The Case of Germany (June 2009). Hamburg Contemporary Economic Discussion Paper No. 26, Available at SSRN: https://ssrn.com/abstract=1520573 or http://dx.doi.org/10.2139/ssrn.1520573

Gabriel M. Ahlfeldt

London School of Economics & Political Science (LSE) - Department of Geography and Environment ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

HOME PAGE: http://personal.lse.ac.uk/ahlfeldg/

Wolfgang Maennig (Contact Author)

Universität Hamburg, Faculty of Business, Economics and Social Sciences ( email )

Von-Melle-Park 5
Hamburg, 20146
Germany

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