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 September 3, 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 September 3, 2014).

Share This



More Health & Medicine News

Wednesday, September 3, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Snack Attack: Study Says Action Movies Make You Snack More

Snack Attack: Study Says Action Movies Make You Snack More

Newsy (Sep. 2, 2014) You're more likely to gain weight while watching action flicks than you are watching other types of programming, says a new study published in JAMA. Video provided by Newsy
Powered by NewsLook.com
U.N. Says Ebola Travel Restrictions Will Cause Food Shortage

U.N. Says Ebola Travel Restrictions Will Cause Food Shortage

Newsy (Sep. 2, 2014) The U.N. says the problem is two-fold — quarantine zones and travel restrictions are limiting the movement of both people and food. Video provided by Newsy
Powered by NewsLook.com
Doctors Fear They're Losing Battle Against Ebola

Doctors Fear They're Losing Battle Against Ebola

AP (Sep. 2, 2014) As a third American missionary is confirmed to have contracted Ebola in Liberia, doctors on the ground in West Africa fear they're losing the battle against the outbreak. (Sept. 2) Video provided by AP
Powered by NewsLook.com
Tech Giants Bet on 3D Headsets for Gaming, Healthcare

Tech Giants Bet on 3D Headsets for Gaming, Healthcare

AFP (Sep. 2, 2014) When Facebook acquired the virtual reality hardware developer Oculus VR in March for $2 billion, CEO Mark Zuckerberg hailed the firm's technology as "a new communication platform." Duration: 02:24 Video provided by AFP
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