Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/73381
Authors: 
Bauer, Christian
Lingens, Jörg
Year of Publication: 
2008
Series/Report no.: 
BGPE Discussion Paper 55
Abstract: 
We analyse the welfare effects of a publicly imposed smoking ban in privately owned places like bars. In an economy where households have heterogenous (positive and negative) attitudes towards smoking bans, bars can use the smoking regime choice as a strategic variable. In doing so, bars may endogenously implement a product differentiation. Focusing on the possibility to separate markets, we derive the Nash equilibrium of the decentral economy in a setting in which duopoly bars compete in capacity and choose the smoking regime. We show how the smoking regime choice is a function of the heterogeneity of households. Moreover, we show that the social planer implements the smoking regime obtained in the decentral economy. As such, imposing smoking bans is welfare decreasing in an economy in which bar landlords chose to allow smoking.
Subjects: 
Smoking Ban
Endogenous Product Differentiation
JEL: 
L13
I18
D61
Document Type: 
Working Paper

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