Smoking in Restaurants: Who Best to Set the House Rules?

David R. Henderson

Econ Journal Watch, 2007, vol. 4, issue 3, 284-291

Abstract: Alamar and Glantz interpret smoking in restaurants as a market failure, and they claim that restaurants should welcome government laws that disallow smoking in all restaurants. Contrary to their claims, restaurant owners do have an incentive to eliminate smoking if doing so raises the value of their restaurants. In restaurants, smokers do not impose negative externalities on non-smokers because restaurant owners have well-defined property rights that cause them to internalize the costs and benefits of smoking. Alamar and Glantz claim to show that non-smoking ordinances increase the capital value of restaurants, but their own data do not, in fact, show that. Finally, if it were true that eliminating smoking in restaurants raises the value of restaurants, then the proper approach would be, not to coerce restaurant owners, but to inform them of that fact.

Keywords: Smoking; smoke-free; externalities; restaurants (search for similar items in EconPapers)
JEL-codes: C10 D62 H23 J83 K32 L51 (search for similar items in EconPapers)
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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