Postprint version. Published in Economic Inquiry, Volume 38, Issue 1, January 1, 2000, pages 151-157.
Copyright © 2000 Blackwell Publishing. The definitive version is available at http://dx.doi.org/10.1111/j.1465-7295.2000.tb00010.x.
Supporters of smoking laws often argue that they do not harm restaurants, bars, and taverns and may even raise their profits. Opponents argue that owners cater to customer preferences regarding smoking and that laws mandating specific smoking policies will therefore negatively impact profits of some firms. This article tests hypotheses regarding how smoking laws affect seating allocations, using data from a nationwide survey of restaurant and bar owners. The empirical evidence indicates that smoking laws exert no significant effect on seating allocations. Firms are shown to allocate greater shares of seating to nonsmoking use when customers exhibit stronger preferences for such seating.