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Will Plain Packaging Reduce Cigarette Consumption?

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  • Harry Clarke
  • David Prentice

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.

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File URL: http://hdl.handle.net/10.1111/j.1759-3441.2012.00186.x
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Bibliographic Info

Article provided by The Economic Society of Australia in its journal Economic Papers.

Volume (Year): 31 (2012)
Issue (Month): 3 (09)
Pages: 303-317

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Handle: RePEc:bla:econpa:v:31:y:2012:i:3:p:303-317

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References

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  1. Vivienne Pham & David Prentice, 2010. "An empirical Analysis of the Counter-factual: A Merger and Divestiture in the Australian Cigarette Industry," Working Papers 2010.08, School of Economics, La Trobe University.
  2. Eckard, E Woodrow, Jr, 1991. "Competition and the Cigarette TV Advertising Ban," Economic Inquiry, Western Economic Association International, vol. 29(1), pages 119-33, January.
  3. Paul R. Milgrom & John Roberts, 1984. "Price and Advertising Signals of Product Quality," Cowles Foundation Discussion Papers 709, Cowles Foundation for Research in Economics, Yale University.
  4. John Sutton, 1997. "Gibrat's Legacy," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 40-59, March.
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Cited by:
  1. Vivienne Pham & David Prentice, 2013. "A Random Coefficients Logit Analysis of the Counterfactual: A Merger and Divestiture in the Australian Cigarette Industry," Working Papers 2013.04, School of Economics, La Trobe University.

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