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Will Plain Packaging Reduce Cigarette Consumption?

Author

Listed:
  • 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.

Suggested Citation

  • Harry Clarke & David Prentice, 2012. "Will Plain Packaging Reduce Cigarette Consumption?," Working Papers 2012.03, School of Economics, La Trobe University.
  • Handle: RePEc:trb:wpaper:2012.03
    Note: ISSN-1837-2198
    as

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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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    References listed on IDEAS

    as
    1. Eckard, E Woodrow, Jr, 1991. "Competition and the Cigarette TV Advertising Ban," Economic Inquiry, Western Economic Association International, vol. 29(1), pages 119-133, January.
    2. John Sutton, 1997. "Gibrat's Legacy," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 40-59, March.
    3. Vivienne Pham & David Prentice, 2010. "An empirical Analysis of the Counter-factual: A Merger and Divestiture in the Australian Cigarette Industry," Working Papers 2010.08, School of Economics, La Trobe University.
    4. Milgrom, Paul & Roberts, John, 1986. "Price and Advertising Signals of Product Quality," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 796-821, August.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Edward J. D. Webb, 2017. "If It’s All the Same to You: Blurred Consumer Perception and Market Structure," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 50(1), pages 1-25, February.
    2. 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.

    More about this item

    Keywords

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

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • K2 - Law and Economics - - Regulation and Business Law
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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