| Premium Brand | Mid-range Brand | Budget/Import Brand | |
|---|---|---|---|
| Specialist Vape Shop | £6.50 | £5.00 | N/A |
| Local Convenience Store | £6.99 | £5.50 | £4.50 |
| Large Supermarket | £5.50 | £4.50 | £3.50 |
| Online Bulk Retailer | £4.50 | £3.50 | £2.50 |
Note: Prices are adjusted for equivalent 2ml e-liquid capacity (the legal UK maximum) to allow direct comparison.
Disposable (single-use) e-cigarettes, or vapes, are increasingly categorized by public health officials and economists as demerit goods. While they are significantly less harmful than combustible tobacco, they generate high external costs. These include youth nicotine addiction, unknown long-term respiratory risks, and severe environmental externalities. The Royal College of Paediatrics and Child Health (RCPCH) recently warned that youth vaping is fast becoming an epidemic, with disposable vapes being particularly appealing due to their bright packaging and sweet flavours. Environmentally, the Material Focus campaign group reported that over 5 million disposable vapes are thrown away in the UK every week, discarding valuable lithium batteries and creating hazardous waste that often causes fires in refuse collection vehicles.
To address these market failures, public health advocates have proposed targeted economic interventions. These include introducing a specific excise duty on the e-liquid contained in disposable devices (e.g., £1.00 per 10ml, or a flat levy per disposable device), banning multi-buy retail promotions (such as "3 for £12" or "buy-two-get-one-free" deals), and mandating plain packaging similar to traditional cigarettes. Some environmental groups are also calling for a national deposit return scheme (DRS) where consumers pay an upfront deposit that is refunded upon returning the used device to a designated recycling point.
In a free-market economy, state intervention to artificially inflate the price of vapes is highly controversial. Proponents of vaping point out that e-cigarettes are highly effective smoking-cessation aids. Taxing or over-regulating disposable vapes could discourage adult smokers from switching to a significantly safer alternative, potentially driving them back to combustible cigarettes—a far worse outcome for public health and NHS costs.
Furthermore, economic analysts warn that excessive taxes or outright bans on disposable vapes could lead to massive government failure. A high tax rate would incentivize an already burgeoning black market for illicit, non-compliant vapes imported from overseas. These illicit vapes often contain dangerous levels of heavy metals like lead and nickel and exceed the UK's legal limits for tank size and nicotine strength.
Independent retailers also express deep concern. A representative for local convenience stores stated: "Independent shops rely heavily on footfall from adult vape buyers. If the government imposes heavy-handed price controls or promotional bans, many small businesses will collapse, while buyers will simply shift to unregulated online black markets."
Evaluate possible economic policies, other than a complete ban on sales to under-18s, that a government might use to reduce significantly the consumption of disposable (single-use) e-cigarettes.
378 exam-style questions on AQA A Level Economics 1.8 The market mechanism, market failure and government intervention in markets, covering 1.8.1 How markets and prices allocate resources, 1.8.2 The meaning of market failure, 1.8.3 Public goods, private goods and quasi-public goods, 1.8.4 Positive and negative externalities in consumption and production, 1.8.5 Merit and demerit goods, 1.8.6 Market imperfections, 1.8.7 Competition policy (A-level only), 1.8.8 Public ownership, privatisation, regulation and deregulation of markets (A-level only), 1.8.9 Government intervention in markets, and 1.8.10 Government failure. Each one has a worked solution and a mark scheme showing where the marks go.