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Market Regulation and Firm Performance: The Case of Smoking Bans in the United Kingdom

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  • Jérôme Adda
  • Samuel Berlinski
  • Stephen Machin

Abstract

This paper analyzes the effects on firms of a ban on smoking in public places. Our empirical strategy relies on comparing outcomes in Scotland before and after the Scottish smoking ban (introduced in March 2006) with those in northern England, where such a ban was not in place. Our analysis of survey data collected from public houses finds that the Scottish smoking ban reduced pub sales with no concomitant effect on prices. An event study analysis of the stock market performance of pub-holding companies corroborates the negative effect of the smoking ban on firm performance.

Suggested Citation

  • 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.
    • Handle: RePEc:ucp:jlawec:doi:10.1086/663349
    DOI: 10.1086/663349
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    1. Kanaka D. Shetty & Thomas DeLeire & Chapin White & Jayanta Bhattacharya, 2011. "Changes in U.S. hospitalization and mortality rates following smoking bans," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 30(1), pages 6-28, December.
    2. 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.
    3. Jérôme Adda & Francesca Cornaglia, 2010. "The Effect of Bans and Taxes on Passive Smoking," American Economic Journal: Applied Economics, American Economic Association, vol. 2(1), pages 1-32, January.
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    9. David Card & Alan Krueger, 1994. "The Effect of the Minimum Wage on Shareholder Wealth," Working Papers 716, Princeton University, Department of Economics, Industrial Relations Section..
    10. 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.
    11. Adams Scott & Cotti Chad D., 2007. "The Effect of Smoking Bans on Bars and Restaurants: An Analysis of Changes in Employment," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-34, February.
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    Cited by:

    1. Andrew M. Jones & Audrey Laporte & Nigel Rice & Eugenio Zucchelli, 2015. "Do Public Smoking Bans have an Impact on Active Smoking? Evidence from the UK," Health Economics, John Wiley & Sons, Ltd., vol. 24(2), pages 175-192, February.
    2. Tamechika, Hanae, 2020. "Effects of Environment-Related Stimulus Policies: An Event Study Approach," 2020 Conference (64th), February 12-14, 2020, Perth, Western Australia 305244, Australian Agricultural and Resource Economics Society.
    3. Jaume Garcia Villar & Ángel López-Nicolás, 2014. "Who is afraid of the big bad ban? An evaluation of the effects of the Spanish clean air law on expenditure at hospitality venues," Economics Working Papers 1413, Department of Economics and Business, Universitat Pompeu Fabra, revised Jul 2014.
    4. Green, Colin P. & Heywood, John. S. & Navarro, Maria, 2014. "Did liberalising bar hours decrease traffic accidents?," Journal of Health Economics, Elsevier, vol. 35(C), pages 189-198.
    5. Miaoqing Yang & Eugenio Zucchelli, 2018. "The impact of public smoking bans on well‐being externalities: Evidence from a policy experiment," Scottish Journal of Political Economy, Scottish Economic Society, vol. 65(3), pages 224-247, July.
    6. 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.
    7. Nikaj, Silda & Miller, Joshua J. & Tauras, John A., 2017. "Exploring heterogeneity in the impact of smoking bans among early and late adopters," Economics Letters, Elsevier, vol. 155(C), pages 164-167.

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