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November 25, 2008

Friday Beer Post

Sometimes the posts, well, they just write themselves. For example, from the inbox:

This is what she says (key point in italics):

The Netherlands has turned upside down by the smoking ban. I wonder if it was that bad in the UK as well? Here small cafes and bars join up to protest against the ban. The smokers all pay a certain amount of money when entering the pub so that the pub owner can pay the fine, but the smoking simply continues. In parliament some people start to say that the ban should be reversed, or at least be loosened for small pub owners who will go bankrupt because of it. It is madness! Dutch people never protest like this. But apparently, they hate to be told what to do. Maybe that is why we allow soft drugs as well. My guess is that we will loosen the smoking ban, that smoking will be allowed in bars smaller than an x amount of square meters. The Germans did the same, and I think it is the only way the Dutch will accept the ban in at least some places.

and here is my response to that:

I must say i think the "smokers entrance fee" is a very clever way around the law and i applaud it entirely. In fact it makes great sense economically. If the fee is such that it decreases the demand for smoking in pubs such that it equates the marginal external cost of going to the pub (including health damages of smoking) to the demand for smoking in pubs then the Marginal cost is equal to the marginal benefit and you have a very nice equilibrium. Perhaps the govt should formalise the fee. They can use the extra revenues to cut income tax and gain a double dividend i.e. health benefits plus wider improvements in the economy. Its great to see people responding to incentives and forming an new equilibrium. The problem is finding the right fee to charge....

Thanks to SLIS!

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