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Smoking laws and their differential effects on restaurants, bars, and taverns

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  • J. Dunham
  • ML. Marlow

Abstract

This article examines the effect of restrictive smoking laws on restaurants, bars, and taverns. Supporters of these laws often argue that they do not harm firms and may even raise profits. Opponents argue that owners cater to customer smoking preferences, and laws mandating specific policies will negatively impact profits. This article provides a framework for examining the distribution of effects that smoking laws exert on businesses, and demonstrates that changes in total sales or tax revenues do not provide a meaningful understanding of the economic implications because smoking laws exert different effects on different firms. The distribution of these effects is examined using data from a nationwide survey of 1,300 restaurant, bar, and tavern owners. While some subsets of firms are predicted to suffer revenue declines, bars are predicted to be more than twice as likely to experience losses as restaurants. An important implication is that the increasing level of governmental restrictions on smoking in the hospitality sector could gradually impact the types of service available to the public. Copyright 2000 Western Economic Association International.

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Bibliographic Info

Article provided by Western Economic Association International in its journal Contemporary Economic Policy.

Volume (Year): 18 (2000)
Issue (Month): 3 (07)
Pages: 326-333

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Handle: RePEc:bla:coecpo:v:18:y:2000:i:3:p:326-333

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Cited by:
  1. Annette Hofmann & Martin Nell, 2012. "Smoking bans and the secondhand smoking problem: an economic analysis," The European Journal of Health Economics, Springer, vol. 13(3), pages 227-236, June.
  2. Goel, Rajeev K., 2013. "Where to snuff the puff? Relative effectiveness of U.S. smoking control policies," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 44(C), pages 97-102.
  3. Michael T. Owyang & E. Katarina Vermann, 2012. "Where there’s a smoking ban, there’s still fire," Review, Federal Reserve Bank of St. Louis, issue July, pages 265-286.
  4. Michael R. Pakko, 2006. "On the economic analysis of smoking bans," Regional Economic Development, Federal Reserve Bank of St. Louis, issue Oct, pages 115-130.
  5. Adams, Scott & Cotti, Chad, 2008. "Drunk driving after the passage of smoking bans in bars," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1288-1305, June.
  6. Alamar, B C & Glantz, Stanton A. Ph.D., 2004. "Smoke-free ordinances increase restaurant profit and value," University of California at San Francisco, Center for Tobacco Control Research and Education qt91w950j4, Center for Tobacco Control Research and Education, UC San Francisco.
  7. Gabriel Ahlfeldt & Wolfgang Maennig, 2009. "Impact of Non-Smoking Ordinances on Hospitality Revenues: The Case of Germany," Working Papers 026, Chair for Economic Policy, University of Hamburg.
  8. John Dunham & Michael Marlow, 2003. "The economic incidence of smoking laws," Applied Economics, Taylor & Francis Journals, vol. 35(18), pages 1935-1942.
  9. Thomas A. Garrett & Michael R. Pakko, 2009. "Casino revenue and the Illinois smoking ban," Working Papers 2009-027, Federal Reserve Bank of St. Louis.

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