California was the first state to implement smoke-free restaurant and bar laws, in 1995 and 1998, respectively. We analyze how these laws affected the distribution of revenues between bars and restaurants. Critics of smoke-free bar laws have often claimed that a prohibition on smoking reduces bar revenues. Similar claims are made for the effects of smoke-free restaurant laws. Such claims implicitly assume that a smoke-free law reduces expenditures by smokers by more than it increases expenditures by non-smokers. Using tax revenue data from 1990 to 2002, our analysis suggests that the actual effect is just the opposite: the 1995 smoke-free restaurant law is associated with an increase in restaurant revenues, while the 1998 smoke-free bar law is associated with an increase in bar revenues.
Copyright (c) 2005 John Wiley & Sons, Ltd.