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Smoke-free ordinances increase restaurant profit and value

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  • Alamar, B C
  • Glantz, Stanton A. Ph.D.

Abstract

This study estimates the value added to a restaurant by a smoke-free policy using regression analysis of the purchase price of restaurants as a function of the presence of a smoke-free law and other control variables. There was a median increase of 16% (interquartile range 11% to 25%) in the sale price of a restaurant in a jurisdiction with a smoke-free law compared to a comparable restaurant in a community without such a law. This result indicates that contrary to claims made by opponents of smoke-free laws, these laws are associated with an increase in restaurant profitability.

Suggested Citation

  • 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.
    • Handle: RePEc:cdl:ctcres:qt91w950j4
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    References listed on IDEAS

    as
    1. Weber, M D & Bagwell, DAS & Fielding, J E & Glantz, Stanton A. Ph.D., 2003. "Long term compliance with California's Smoke-Free Workplace law among bars and restaurants in Los Angeles County," University of California at San Francisco, Center for Tobacco Control Research and Education qt82m3j641, Center for Tobacco Control Research and Education, UC San Francisco.
    2. Ritch, W.A. & Begay, M.E., 2001. "Strange bedfellows: The history of collaboration between the Massachusetts Restaurant Association and the tobacco industry," American Journal of Public Health, American Public Health Association, vol. 91(4), pages 598-603.
    3. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    4. 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.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Renaud Foucart, 2017. "Group Consumption and Product Diversity: The Case of Smoking Bans," Journal of Industrial Economics, Wiley Blackwell, vol. 65(3), pages 559-584, September.
    2. David R. Henderson, 2008. "Smoking in Restaurants: Rejoinder to Alamar and Glantz," Econ Journal Watch, Econ Journal Watch, vol. 5(2), pages 163-168, May.
    3. Tomlin Jonathan T., 2009. "The Impact of Smoking Bans on the Hospitality Industry: New Evidence from Stock Market Returns," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-19, March.
    4. Kvasnicka, Michael & Tauchmann, Harald, 2012. "Much ado about nothing? Smoking bans and Germany's hospitality industry," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 44(35), pages 4539-4551.
    5. Benjamin C. Alamar & Stanton A. Glantz, 2008. "Externalities in the Workplace: A Response to a Rejoinder to a Response to a Response to a Paper," Econ Journal Watch, Econ Journal Watch, vol. 5(2), pages 169-173, May.
    6. Silvia Tiezzi, 2009. "The Economic Impact of Clean Indoor Air Laws: A Review of Alternative Approaches and of Empirical findings," Department of Economics University of Siena 570, Department of Economics, University of Siena.
    7. Joni Hersch, 2005. "Smoking Restrictions as a Self-Control Mechanism," Journal of Risk and Uncertainty, Springer, vol. 31(1), pages 5-21, July.
    8. Jerome Adda & Samuel Berlinski & V. Bhaskar & Stephen Machin, 2009. "Market regulation and firm performance: the case of smoking bans in the UK," IFS Working Papers W09/13, Institute for Fiscal Studies.
    9. Ljudevit Pranic & Snjezana Pivac & Anela Colak, 2013. "Cafe Owners Attitudes Before The Enactment Of A Smoke-Free Legislation In Transition Countries," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 22(1), pages 57-78, june.
    10. 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.
    11. Yanxia Wei & Ron Borland & Pinpin Zheng & Hua Fu & Fan Wang & Jingyi He & Yitian Feng, 2019. "Evaluation of the Effectiveness of Comprehensive Smoke-Free Legislation in Indoor Public Places in Shanghai, China," IJERPH, MDPI, vol. 16(20), pages 1-11, October.
    12. 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.
    13. 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.
    14. Steven G. Medema, 2020. "The Coase Theorem at Sixty," Journal of Economic Literature, American Economic Association, vol. 58(4), pages 1045-1128, December.
    15. Reichmann, Gerhard & Sommersguter-Reichmann, Margit, 2012. "The Austrian Tobacco Act in practice – Analysing the effectiveness of partial smoking bans in Austrian restaurants and bars," Health Policy, Elsevier, vol. 104(3), pages 304-311.
    16. Robert K. Fleck & F. Andrew Hanssen, 2008. "Why Understanding Smoking Bans Is Important For Estimating Their Effects: California’S Restaurant Smoking Bans And Restaurant Sales," Economic Inquiry, Western Economic Association International, vol. 46(1), pages 60-76, January.
    17. Jérôme Adda & Samuel Berlinski & Stephen Machin, 2012. "Market Regulation and Firm Performance: The Case of Smoking Bans in the United Kingdom," Journal of Law and Economics, University of Chicago Press, vol. 55(2), pages 365-391.
    18. 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.
    19. Michael L. Marlow, 2008. "Honestly, Who Else Would Fund Such Research? Reflections of a Non-Smoking Scholar," Econ Journal Watch, Econ Journal Watch, vol. 5(2), pages 240-268, May.

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