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How Do Private Markets Address Smoking Externalities?

Author

Listed:
  • Amelia Biehl

    (University of Michigan-Flint)

  • Christopher C. Douglas

    (University of Michigan-Flint)

Abstract

We survey bars and restaurants in Genesee County, Michigan to examine how, absent a smoking ban, different establishments accommodate smokers and nonsmokers. We find evidence that smokers and nonsmokers are systematically accommodated. The majority of establishments without bars voluntarily ban smoking, and the majority of establishments with bars restrict smoking to a separate room or to the bar area. This pattern of accommodation is consistent with what the Coase Theorem would predict when dealing with the externalities created by secondhand smoke.

Suggested Citation

  • Amelia Biehl & Christopher C. Douglas, 2011. "How Do Private Markets Address Smoking Externalities?," Journal of Economic Insight, Missouri Valley Economic Association, vol. 37(1), pages 39-57.
    • Handle: RePEc:mve:journl:v:37:y:2011:i:1:p:39-57
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    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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