Smoke-free Ordinances Increase Restaurant Profit and Value

Abstract

This study estimates the value added to a restaurant by a smoke-free policy using regression analysis of the purchase price of restaurants as a function of the presence of a smoke-free law and other control variables. There was a median increase of 16% (interquartile range 11% to 25%) in the sale price of a restaurant in a jurisdiction with a smoke-free law compared to a comparable restaurant in a community without such a law. This result indicates that contrary to claims made by opponents of smoke-free laws, these laws are associated with an increase in restaurant profitability. (JEL "I120", "H000", "D780") Copyright 2004 Western Economic Association International.