Smoking Bans and the Second-Hand Smoking Problem: An Economic Analysis

European Journal of Health Economics, Vol. 13, No. 3, pp. 227-236, 2012

10 Pages Posted: 10 Aug 2012

See all articles by Annette Hofmann

Annette Hofmann

St John's University - School of Risk Management

Martin Nell

University of Hamburg

Date Written: August 9, 2012

Abstract

Smoking bans are gaining widespread support in the European Union and other countries. The vast majority of these bans are partial bans given that smoking is still permitted in certain places. This article investigates the role of partial smoking bans in coping with externalities caused by the second-hand smoking problem. Although it is widely known that Pigouvian taxation is superior to a perfect ban, this result does not necessarily carry over to a \textit{partial} ban because taxes cannot (easily) be differentiated according to location. We show that under an easy and intuitive condition, enacting a partial smoking ban alone always improves social welfare (a) in an unregulated society and (b) even in a regulated society if externalities can be eliminated, and it is ensured that a combination of Pigouvian tax and a partial smoking ban leads to a higher social optimum than implementing corrective Pigouvian taxation alone.

Keywords: smoking bans, externalities, public health policies

JEL Classification: C72, H30, I18

Suggested Citation

Hofmann, Annette and Nell, Martin, Smoking Bans and the Second-Hand Smoking Problem: An Economic Analysis (August 9, 2012). European Journal of Health Economics, Vol. 13, No. 3, pp. 227-236, 2012, Available at SSRN: https://ssrn.com/abstract=2127077

Annette Hofmann (Contact Author)

St John's University - School of Risk Management ( email )

8000 Utopia Parkway
Queens, NY 11439
United States

Martin Nell

University of Hamburg ( email )

Von-Melle-Park 5
20146 Hamburg
Germany
+49 40 42838 4014 (Phone)
+49 40 42838 5505 (Fax)

HOME PAGE: http://www.rrz.uni-hamburg.de/IfVBL/nelle.htm

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