Taxation and anti-smoking campaigns: Complementary policies in tobacco control

We examine the optimal design of policies directed at regulating tobacco consumption through two types of instruments: taxation and anti-smoking mass media campaigns. We find that the main role of taxation is to correct for the population-average internal costs of smoking, while anti-smoking campaigns serve a complementary role. Namely, they add to the social welfare benefits of tobacco regulation as they are relatively more effective than taxation at discouraging smoking by individuals characterized by low degrees of self-control and high smoke-related health harms.