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Keywords:

  • economics;
  • plain packaging;
  • cigarette industry;
  • advertising;
  • market structure
  • I18;
  • L11;
  • L66;
  • M37

The Australian Parliament has passed legislation compelling tobacco products to be sold in “plain packaging.” This article reviews this legislation and its likely effects on prices, market structure in the tobacco industry and on smoking behaviour. Industry changes following two previous sets of restrictions on advertising are examined for relevant empirical evidence. Without offsetting tax increases, the legislation will plausibly reduce prices but significant entry into the industry and greater consumption of counterfeit/illegal cigarettes are unlikely. Provided that tax increases offset any induced fall in prices, plain packaging will reduce cigarette consumption.