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Will Plain Packaging Reduce Cigarette Consumption?

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Author Info

  • Harry Clarke

    ()
    (Department of Economics, La Trobe University)

  • David Prentice

    ()
    (Department of Economics, La Trobe University)

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://www.latrobe.edu.au/__data/assets/pdf_file/0009/208575/2012.03.pdf
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File URL: http://www.latrobe.edu.au/__data/assets/pdf_file/0009/208575/2012.03.pdf
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Bibliographic Info

Paper provided by School of Economics, La Trobe University in its series Working Papers with number 2012.03.

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Length: 25 pages
Date of creation: 2012
Date of revision:
Handle: RePEc:trb:wpaper:2012.03

Note: ISSN-1837-2198
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Postal: Victoria 3086
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Web page: http://www.latrobe.edu.au/economics
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Related research

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

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References

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  1. Pham, Vivienne & Prentice, David, 2010. "An empirical analysis of the counterfactual: a merger and divestiture in the Australian cigarette industry," MPRA Paper 26713, University Library of Munich, Germany.
  2. 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.
  3. 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.
  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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