However, there are many economical factors which the ban will have a clear effect on, such as:-
- The market for alcohol sales in pubs and clubs.
- The market for cigarettes
- The market for nicorette chewing gum
1. The Market for alcohol sales in pubs and clubs
The Scottish licensed trade association believe that pubs and clubs will be so badly affected by the ban that they predict that up to 140 pubs could be closed and around 2,500 jobs lost. This is with the belief that more people are going to drink for longer at home before going out so that they can smoke. However, this is backed by the figures shown on the BBC website, which show that after the ban was introduced in Dublin “Irish Brewers Association has a reported a 6% fall in beer sales . . . . . .Vinters Association, which represents Dublins pubs, trade is down by 16%.”
Below there is a graph showing how the demand for alcohol will probably show a decline, due to the smoking ban. This meaning the demand curve will shift to the left. Even though there will be a decline in demand there is no movement in the supply, as the pubs and clubs will still have the same amount of alcohol to supply to the customers. Therefore the point where supply meets demand (equilibrium) is lower showing a decrease in revenue.
However, all of this information is based on the events which took place in Dublin after the ban. However, if these facts were based on the information given on the BBC website stating that the results after the ban was introduced in New York City were positive then the supply and demand curve would look entirely different. The pubs, clubs and restaurants within New York after the ban was introduced showed a positive effect with them all showing an increase in trade. Therefore, the supply and demand graph would look more like this:-
In the table above the demand curve has shifted to the right, showing an increase in demand. Also in this case as demand has risen so has supply, resulting in the supply curve making a shift to the right. Supply would have to increase to meet the demands of the consumers. Therefore the equilibrium has risen showing an increase in revenue. This clearly showing to have a positive effect on the market of alcohol in pubs and clubs due to the Smoking ban.
Another fact taken from the BBC website is that a regular in a local pub in East Kilbride was quoted saying “that about 70% of its customers were smokers”, meaning that although the ban may not suit the smokers in Scotland it may encourage more non smokers to come to the pubs, this may keep the pubs revenues at the same level they have started at or even increase their revenues.
2. The Market for cigarettes
It is believed that the sales of cigarettes will decrease due to the smoking ban. As stated in the BBC news website after the ban was introduced in Dublin “7,000 people stopped smoking” resulting in cigarette sales decreasing by 16%.
It is thought that the same thing is to happen in Scotland. Below is the supply and demand graph. The graph showing the demand curve shifting to the left which is showing a decline in the demand for cigarettes. Again, the supply curve will stay the same, as there will still be the same amount of cigarettes to supply to the customers to begin with. The equilibrium is lower after the shift showing a decrease in revenue.
3. The Market for Nicorette chewing gum
As already stated above, there was a huge amount of people shown to have stopped smoking due to the introduction of the ban in Dublin. It is hoped that this will be the case in Scotland, what with 13,000 people dying a year due to smoking illnesses. As a result methods to help cut down or stop smoking will be in high demand, such as nicorette gum. Therefore showing a demand and supply increase in the market, as shown below.
Above the demand has increased therefore the curve has shifted to the right. Due to the rise in demand the supply will need to increase to meet consumer demand resulting in a shift to the right. Revenue increasing is shown with the increase of the equilibrium point.
Conclusion
In conclusion it is shown that with the introduction of the smoking ban that it will help with the Scottish health problems, resulting in less use of the NHS. However it has shown that in Dublin it affected the publicans in a negative way, which has resulted in the pubs and clubs revenues dropping. However, it was shown in the complete reverse in New York City with their pubs, clubs and restaurants showing an increase in revenue. As the ban has just been introduced this month in Scotland it is too early to definitely state which category Scotland will fall under, negative or positive. However, as it is a positive for the health of the Scottish people the hope is that it will be a positive for the economy and that Scotland will follow in the trend of New York City.
Bibliography
1. John Sloman(2005) Essentials of Economics, third edition, pages 5-6, 26-27, 40-43,36,30-32
2. 28.03.2006
3. 28.03.2006
4. 24.03.2006
5. 28.03.2006
6. Channel 4 news, 10pm. 26.03.2006
