Cigarettes are Considered a Demerit Good. Should the UK Government Allow the Market to Operate Freely in the Allocation of Cigarettes, or Should the Government Intervene in an Attempt to Reduce the Consumption of Cigarettes Due to Market Failure. Discuss Table of Contents Introduction 3 Thesis Statement 4 Discussion 4 Analysis 12 Recommendations 14 Conclusion 17 References 18 Introduction In this era of globalisation and industrialisation, the demand of demerit goods has enhanced with a remarkable pace, acting as the front-liner for a few economies…
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For instance, government of diverse countries have imposed various types of taxes or statutory declarations against consumption of these products with the desire to reduce the utilisation of the demerit products. Demerit goods are described as those products and/or services, the intake of which may result in unhealthy or socially adverse impacts over the individuals of a country. There are varied types of demerit goods such as tobacco or cigarettes, alcoholic drinks, junk food items and recreational drugs among others. It is in this context that demerit goods, such as cigarettes are considered to be worse as it offers varied types of physical disorders to an individual as well as the society. With this due consideration, cigarette smoking is regarded as one of the key factors leading to negative externalities, which might hamper the social well-being within an economy by a large extent (Cancer Research UK, “Tobacco and Cancer Risk – Statistics”). ...
tive externality takes place when demerit goods offer considerable amount of pessimistic impact over the society, thereby hindering the public health and its well-being. It mainly occurs when the societal cost increases than the private expenditures as a consequence of increasing purchases of demerit goods by the nationals. It leads to the failure of the market, due to surplus production of the product in comparison to the total requirement of the society. This results in the enhancement of the negative influence of these externalities within the society which ultimately amplifies the cost bore by the society of United Kingdom (Cancer Research UK, “Tobacco and Cancer Risk – Statistics”). Demerit goods such as cigarettes are considered as those products, with the regular consumption of which results in the hindrance for health development of an individual and that of the society as well. Even though the regular consumption of demerit goods such as cigarettes may also lead to negative externalities, the demand of these products are identified to be increasing at a rapid rate in the markets of UK, which can be apparently observed with reference to the diagram represented below (Cancer Research UK, “Intensity Of Smoking Within The Citizens Of UK”). Intensity of Smoking within the Citizens of UK Source: (Cancer Research UK, “Intensity of Smoking within the Citizens of UK”) The underlining reason, which results in the overall enhancement of the demand for such demerit goods or negative externalities, is mainly due to lack of perfect information within the customers of the UK society. Thus, due to lack of appropriate knowledge, tobacco consumption or cigarette smoking has currently emerged as one of the significant social factors to be considered by the UK
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