Evaluate the effectiveness of providing information to solve market failure.
14 February 2003 General advertising
14 May 2003 Promotions
30 July 2003 Sponsorship of sporting events within the UK May
2004 Particular advertisements in tobacconists
21 December 2004 Large adverts in shops, pubs and clubs
31 July 2005 Sponsorship of excepted global events; brandsharing
Problems of tax
A third of the cigarettes smoked in Romania today are smuggled into the country. It is a trade that is costing the government millions in lost revenue and has forced one local cigarette factory to temporarily shut down. The Romanian government has now launched a renewed crackdown on the trade.
Kevin Rudd welcomes Australian new cigarette packet law
Australia is to force tobacco companies to use plain cigarette packaging carrying graphic health warnings. From July 2012, manufacturers would be required to drop all colour and branding logos from cigarette packets.
The plan, billed as a world-first, comes after recommendations were made by the World Health Organisation. Prime Minister Kevin Rudd said tobacco companies would hate the measure but he said the government made no apologies.
Australia also announced a 25% increase in tax on cigarettes, effective from 0001 on Friday. The move will put A$2.16 ($1.99, £1.31) on a pack of 30 cigarettes. It follows regulations on tobacco advertising which have helped cut smoking significantly, from 30.5% of the population aged 14 and over in 1988 to 16.6% in 2007. The tax hike comes a day after the New Zealand government announced it would raise cigarette taxes by 30% over three years.
Which advert is more effective?
> Changing peoples behaviour as they understand the true cost is more likely to have a long term affect.
> Raising awareness of the EC can increase the social awareness of the problem and help create a value system that suggests consuming these goods and services is bad. They amy reduce up take and increase the incentive for others to stop.
> A fairer method, you explain to the economic agent the full ocst (PC & EC) then allow them to make a decission. This still allows them a choice in comparison to other options such as an outright ban.
> People may ignore the advertising.
> People may not understand the information being conveyed if to complex.
> The infromation may not be broad enough to reach all economic agents assocaited with consumption i.e. leaflets at the NHS.
> Only a short term effect if the addicitive qualitites of the good/service are to high.
What will determine the success of advertising the PC & EC?
How can we illustarte this in a diagram for good L4?
Why even with this information will people still choose to consumer demerit G/S?
How can we resolve this?
Overall how importnat is the provision of information in solving market failure?
The European Parliament has passed new laws to clamp down on misleading claims on food product labels.
All foods that make a new health claim will now have to be checked before they go on sale.
Statements such as 'low fat' will have to meet a standardised definition agreed by the EU.
And foods that make a nutrition claim - such as being low in salt - will have to make it clear on the same label if they are also high in fat or sugar.