The regulation of public smoking has become an increasingly prominent policy issue. Many public and private institutions have instituted no-smoking policies or have restricted smoking to particular areas. Smoking restrictions are a sensible and targeted policy tool for limiting exposure to cigarette smoke. The presence of environmental tobacco smoke is a classic externality problem. Smokers derive pleasure from smoking, but it gives rise to a side effect that is undesirable for those exposed to the smoke. There are two major environmental tobacco smoke risks—lung cancer and heart disease....

The regulation of public smoking has become an increasingly prominent policy issue. Many public and private institutions have instituted no-smoking policies or have restricted smoking to particular areas. Smoking restrictions are a sensible and targeted policy tool for limiting exposure to cigarette smoke. The presence of environmental tobacco smoke is a classic externality problem. Smokers derive pleasure from smoking, but it gives rise to a side effect that is undesirable for those exposed to the smoke. There are two major environmental tobacco smoke risks—lung cancer and heart disease. Most of the debate in the literature and the battles in the popular press have been over the validity of the lung cancer risk estimates. The antismoking fervor has led to the support of a variety of initiatives that would dramatically restrict public smoking. The linchpin of those efforts has been the estimated health impact of ETS on non-smokers. Much of the scientific evidence concerning ETS is highly speculative.