Featured Research

from universities, journals, and other organizations

Researchers call for a price cap on cigarette profits

Date:
October 4, 2010
Source:
University of Bath
Summary:
An independent regulatory agency is needed to cap the excessive profits made by cigarette manufacturers, urge researchers.

An independent regulatory agency is needed to cap the excessive profits made by cigarette manufacturers, say researchers from the University of Bath.

Cigarette manufacturers currently make roughly double the profits of most other companies. The creation of an 'Ofsmoke' agency to regulate the industry would increase tax revenue and protect public health, according to the article published in the journal Tobacco Control.

Professor Anna Gilmore, from the University's Department for Health and the UK Centre for Tobacco Control Studies; Dr Robert Branston, from the School of Management; and Professor David Sweanor from the University of Ottawa's Faculty of Law, say that capping the pre-tax cigarette manufacturers' price would safeguard society from the market failure behind manufacturers' pricing power and profits.

Regulation would set a maximum price that cigarette companies could charge for their product, based on an assessment of genuine operational costs. Retail mark-up would not be affected, or the price that consumers pay, but the excess profit currently accrued by cigarette manufacturers would be transferred to the national treasury through increased tax.

The system would be set up at no cost to the consumer or taxpayer, funded instead through a levy or licence fee paid by tobacco companies.

Dr Robert Branston, Deputy Director of the University's Centre for Governance & Regulation, said: "A handful of companies dominate the market and cream off massive profits. With such a deadly product, competition isn't attractive, so we've identified regulation as an alternative that stands to benefit both government and public health.

"The market has failed to curb cigarette manufacturers in terms of pricing power and profit, and tobacco control policies have unintentionally exacerbated the problem.

"Clamping down on the extreme profitability of cigarettes would reduce the incentive for tobacco companies to fight public health measures and mean they have fewer funds at their disposal.

"A move to regulation would enable tobacco control policies to be expanded as companies would be partially insulated against impact on revenue and less able to argue against them."

He went on to say that regulation would also be a way of preventing people from down-trading to cheaper products and restraining the behaviour of companies when it comes to cigarette smuggling and marketing to young people.

"The tobacco industry is likely to argue that this type of direct economic regulation is an extreme reaction, but it's hard to argue that nothing should be done given the extent of market power that these firms are enjoying and the number of deaths the sector causes," said Dr Branston.

The paper is based on the UK but researchers are confident that the system could be applied to most markets.

They are planning further research to quantify the tax benefits of regulation and its affect on tobacco manufacturers.


Story Source:

The above story is based on materials provided by University of Bath. Note: Materials may be edited for content and length.


Journal Reference:

  1. A. B. Gilmore, J. R. Branston, D. Sweanor. The case for OFSMOKE: how tobacco price regulation is needed to promote the health of markets, government revenue and the public. Tobacco Control, 2010; 19 (5): 423 DOI: 10.1136/tc.2009.034470

Cite This Page:

University of Bath. "Researchers call for a price cap on cigarette profits." ScienceDaily. ScienceDaily, 4 October 2010. <www.sciencedaily.com/releases/2010/10/101004101644.htm>.
University of Bath. (2010, October 4). Researchers call for a price cap on cigarette profits. ScienceDaily. Retrieved July 27, 2014 from www.sciencedaily.com/releases/2010/10/101004101644.htm
University of Bath. "Researchers call for a price cap on cigarette profits." ScienceDaily. www.sciencedaily.com/releases/2010/10/101004101644.htm (accessed July 27, 2014).

Share This




More Health & Medicine News

Sunday, July 27, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Trees Could Save More Than 850 Lives Each Year

Trees Could Save More Than 850 Lives Each Year

Newsy (July 27, 2014) A national study conducted by the USDA Forest Service found that trees collectively save more than 850 lives on an annual basis. Video provided by Newsy
Powered by NewsLook.com
Google's Next Frontier: The Human Body

Google's Next Frontier: The Human Body

Newsy (July 27, 2014) Google is collecting genetic and molecular information to paint a picture of the perfectly healthy human. Video provided by Newsy
Powered by NewsLook.com
What's To Blame For Worst Ebola Outbreak In History?

What's To Blame For Worst Ebola Outbreak In History?

Newsy (July 27, 2014) A U.S. doctor has tested positive for the deadly Ebola virus, as the worst-ever outbreak continues to grow. Video provided by Newsy
Powered by NewsLook.com
Losing Sleep Leaves You Vulnerable To 'False Memories'

Losing Sleep Leaves You Vulnerable To 'False Memories'

Newsy (July 27, 2014) A new study shows sleep deprivation can make it harder for people to remember specific details of an event. Video provided by Newsy
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:
from the past week

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile: iPhone Android Web
Follow: Facebook Twitter Google+
Subscribe: RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins