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3.6.2 The impact of government intervention

Medium
123
Question 1

Market for Disposable Vaporisers in the UK

Figure 1: Trend in the purchase of single-use disposable vaporisers (in millions of units, UK, 2017 to 2024)

20172018201920202021202220232024
154512028042035021095

Extract A: New environmental charge on disposable e-cigarettes

An environmental levy on single-use disposable vaporisers was introduced in the UK in 2022 to tackle the hazardous waste of lithium-ion batteries and plastic casing ending up in landfills. The charge was set at £1.20 per disposable unit.

The Minister for Environmental Quality noted that the charge reduced impulse purchases by teenagers and casual users, preventing tons of lithium from contaminating ground soil. Without intervention, the market mechanism fails to price in the negative environmental externalities of disposable electronics. However, some health groups argue this regressive tax disproportionately impacts low-income individuals attempting to transition away from smoking cigarettes.

Extract B: The disposable vape levy

Independent vape shops and domestic manufacturers have voiced concerns regarding the UK disposable vape levy, warning that the policy is distorting the local retail market.

The levy charges £1.80 per imported unit containing non-recyclable compound plastics. Refillable or reusable pod systems are fully exempt.

A spokesperson for the Vape Retailers Association warned of an unintended consequence of the levy, highlighting a sudden shift towards illicit, black-market imports. "Instead of helping consumers switch to sustainable reusable systems, this policy is driving consumers to unregulated street vendors selling non-compliant high-strength products, bypassing the safety guidelines and tax completely," they commented. Many smaller local shops rely on legal disposable vape sales to cover high high-street rents.

Extract C: Recycling initiatives

Around 5 million disposable vapes are thrown away weekly in the UK. Research into collection habits shows that standard recycling bins at supermarkets increase return rates by 3.5%, while a £1 store credit deposit-return scheme yields an 11.2% increase.


Explain what is meant by the 'unintended consequence' (Extract B) of the disposable vape levy.

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3.6.2 The impact of government intervention Questions

  1. A Level
  2. /Economics
  3. /3.6.2 The impact of government intervention