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Smoking in Restaurants: Who Best to Set the House Rules?

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  • David R. Henderson
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    Abstract

    Alamar and Glantz interpret smoking in restaurants as a market failure, and they claim that restaurants should welcome government laws that disallow smoking in all restaurants. Contrary to their claims, restaurant owners do have an incentive to eliminate smoking if doing so raises the value of their restaurants. In restaurants, smokers do not impose negative externalities on non-smokers because restaurant owners have well-defined property rights that cause them to internalize the costs and benefits of smoking. Alamar and Glantz claim to show that non-smoking ordinances increase the capital value of restaurants, but their own data do not, in fact, show that. Finally, if it were true that eliminating smoking in restaurants raises the value of restaurants, then the proper approach would be, not to coerce restaurant owners, but to inform them of that fact.

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    Bibliographic Info

    Article provided by Econ Journal Watch in its journal Econ Journal Watch.

    Volume (Year): 4 (2007)
    Issue (Month): 3 (September)
    Pages: 284-291

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    Handle: RePEc:ejw:journl:v:4:y:2007:i:3:p:284-291

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    Related research

    Keywords: Smoking; smoke-free; externalities; restaurants;

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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.

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