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Impact of Non-Smoking Ordinances on Hospitality Revenues: The Case of Germany

Gabriel Ahlfeldt and Wolfgang Maennig ()

No 26, Working Papers from Chair for Economic Policy, University of Hamburg

Abstract: Non-smoking ordinances are among the most popular albeit controversial public health-care legislations worldwide. This article provides an empirical assessment of the impact of non-smoking ordinances on bar and restaurant revenues in German Federal States. By application of panel spline regression and difference-in-difference strategies, we find negative impact limited to bars in the very short run. If any, there is a positive impact on total expenditures in the long run, indicating that either consumption pattern has not changed at all or that any reduction in spending by smokers is compensated for by a corresponding increase by non-smokers. These findings support the German – and similar – non-smoking legislations in the sense that positive externalities resulting from reduced health care cost are likely to outweigh the risk to businesses in the hospitality sector, at least in the long run.

Keywords: Keywords: Bar Revenues; Non-smoking Ordinances; Restaurant Revenues (search for similar items in EconPapers)
JEL-codes: I18 K32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hea and nep-tur
Date: 2009
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Published in Hamburg Contemporary Economic Discussions, Issue 26, 2009

Downloads: (external link) First version, 2009 (application/pdf)

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Journal Article: Impact of Non-smoking Ordinances on Hospitality Revenues: The Case of Germany (2010) Downloads
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