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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.

Suggested Citation

  • J. Dunham & ML. Marlow, 2000. "Smoking laws and their differential effects on restaurants, bars, and taverns," Contemporary Economic Policy, Western Economic Association International, vol. 18(3), pages 326-333, July.
  • Handle: RePEc:bla:coecpo:v:18:y:2000:i:3:p:326-333
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    References listed on IDEAS

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    1. Boyes, William J & Marlow, Michael L, 1996. "The Public Demand for Smoking Bans," Public Choice, Springer, vol. 88(1-2), pages 57-67, July.
    2. Gary S. Becker & Kevin M. Murphy, 1993. "A Simple Theory of Advertising as a Good or Bad," The Quarterly Journal of Economics, Oxford University Press, vol. 108(4), pages 941-964.
    3. Dwight R. Lee, 1991. "Environmental Economics And The Social Cost Of Smoking," Contemporary Economic Policy, Western Economic Association International, vol. 9(1), pages 83-92, January.
    4. repec:aph:ajpbhl:1994:84:7:1081-1085_6 is not listed on IDEAS
    5. Jeremiah M. Allen, 1992. "ENVIRONMENTAL ECONOMICS AND THE SOCIAL COST OF SMOKING: A Comment," Contemporary Economic Policy, Western Economic Association International, vol. 10(1), pages 101-101, January.
    6. Dunham, John & Marlow, Michael L, 2000. "The Effects of Smoking Laws on Seating Allocations of Restaurants, Bars, and Taverns," Economic Inquiry, Western Economic Association International, vol. 38(1), pages 151-157, January.
    7. Carol Horton Tremblay & Victor J. Tremblay, 1995. "The Impact Of Cigarette Advertising On Consumer Surplus, Profit, And Social Welfare," Contemporary Economic Policy, Western Economic Association International, vol. 13(1), pages 113-124, January.
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    Citations

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    Cited by:

    1. Bauer, Christian & Lingens, Jörg, 2009. "Smoking Bans in the Presence of Social Interaction," Discussion Papers in Economics 10593, University of Munich, Department of Economics.
    2. 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.
    3. 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.
    4. Bree L. Dority & Mary G. Mcgarvey & Eric C. Thompson & Jyothsna Sainath, 2013. "Local And Statewide Smoke-Free Laws In Nebraska: The Effects On Keno Establishments," Contemporary Economic Policy, Western Economic Association International, vol. 31(3), pages 549-564, July.
    5. Thomas A. Garrett & Michael R. Pakko, 2009. "Casino revenue and the Illinois smoking ban," Working Papers 2009-027, Federal Reserve Bank of St. Louis.
    6. 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.
    7. Ahlfeldt Gabriel M. & Maennig Wolfgang, 2010. "Impact of Non-smoking Ordinances on Hospitality Revenues: The Case of Germany," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 230(5), pages 506-521, October.
    8. Hammar, Henrik, 2004. "Restaurant owner perceptions of the effects of a smoking ban," Health Policy, Elsevier, vol. 70(2), pages 243-254, November.
    9. Ljudevit Pranić & Snježana Pivac, 2016. "Effects of a partial smoking ban on employees' post-implementation perceptions and job satisfaction in cafes vs. restaurants in Croatia," Tourism and Hospitality Industry 26, University of Rijeka, Faculty of Tourism and Hospitality Management.
    10. repec:bla:jindec:v:65:y:2017:i:3:p:559-584 is not listed on IDEAS
    11. Leah K. Lakdawala & David Simon, 2016. "The Intergenerational Consequences of Tobacco Policy," Working papers 2016-27, University of Connecticut, Department of Economics.
    12. 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.
    13. 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.
    14. John Dunham & Michael Marlow, 2003. "The economic incidence of smoking laws," Applied Economics, Taylor & Francis Journals, vol. 35(18), pages 1935-1942.
    15. Annette Hofmann & Martin Nell, 2012. "Smoking bans and the secondhand smoking problem: an economic analysis," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 13(3), pages 227-236, June.
    16. Richard Thalheimer & Mukhtar M. Ali, 2008. "The Demand For Casino Gaming With Special Reference To A Smoking Ban," Economic Inquiry, Western Economic Association International, vol. 46(2), pages 273-282, April.
    17. Tami Gurley-Calvez & George W. Hammond & Randall A. Childs, 2014. "Labor Market Impacts Of Smoking Regulations On The Restaurant Industry," Contemporary Economic Policy, Western Economic Association International, vol. 32(4), pages 681-694, October.
    18. Benjamin C. Alamar & Stanton A. Glantz, 2004. "Smoke-free Ordinances Increase Restaurant Profit and Value," Contemporary Economic Policy, Western Economic Association International, vol. 22(4), pages 520-525, October.
    19. David R. Henderson, 2007. "Smoking in Restaurants: Who Best to Set the House Rules?," Econ Journal Watch, Econ Journal Watch, vol. 4(3), pages 284-291, September.

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