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Published on: August 25, 2018
An Economic Analysis of the Pre-Deeming US Market for Nicotine Vaping Products
David T Levy1, Eric N Lindblom2, David T Sweanor3
1Cancer Prevention and Control, Lombardi Comprehensive Cancer Center, Georgetown University, Washington, DC.
Objectives:
Public health policies are often enacted without adequate consideration of the existing market structure or their impacts on that market structure. This paper provides context for the potential impact of regulations on nicotine vaping products (NVP) use by providing a structural analysis of competition in the US NVP market before FDA regulation.
Methods:
A literature review was conducted with the aim of providing a framework for analysis that: 1) defines the market; 2) evaluates market concentration; 3) identifies entry barriers; and 4) examines firm conduct.
Results:
The NVP market includes retail, internet sellers and vape shops. Although conventional retail became more concentrated after the major cigarette companies entered the NVP market, the vape shop and internet sectors remain substantially less concentrated, producing an overall low market concentration, with few entry barriers and competitive behavior.
Conclusions:
The largely unregulated US NVP market has been highly competitive, with a high degree of innovation. However, new FDA deeming regulations as applied to NVPs could make it difficult for smaller companies to remain in the market and could discourage new companies and new product innovations from entering the market.
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