Will Plain Packaging Reduce Cigarette Consumption?

25 Pages Posted: 19 Apr 2012  

Harry Clarke

University of Melbourne

David Prentice

University of Nottingham - Malaysia Campus

Date Written: April 18, 2012

Abstract

The Australian Parliament has passed legislation compelling tobacco products to be sold in “plain packaging”. This paper reviews this legislation and its likely effects on prices, market structure in the tobacco industry and on smoking behaviour. Industry changes following two previous sets of restrictions on advertising are examined for relevant empirical evidence. Without offsetting tax increases the legislation will plausibly reduce prices but significant entry into the industry and greater consumption of counterfeit/illegal cigarettes are unlikely. Provided that tax increases offset any induced fall in prices that might result, plain packaging will reduce cigarette consumption.

Keywords: Cigarettes, Plain Packaging, Competition, Concentration, Advertising, Entry, Exit

JEL Classification: I18, K2, K32, L11, L13, L66, M37

Suggested Citation

Clarke, Harry and Prentice, David, Will Plain Packaging Reduce Cigarette Consumption? (April 18, 2012). Available at SSRN: https://ssrn.com/abstract=2042296 or http://dx.doi.org/10.2139/ssrn.2042296

Harry Clarke

University of Melbourne ( email )

Barry Street
Carlton
Melbourne 3052, Vic 3086
Australia

David Prentice (Contact Author)

University of Nottingham - Malaysia Campus ( email )

Jalan Broga
Selangor Darul Ehsan, Semenyih 43500
Malaysia

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