Vaping is now one of the biggest challenges for schools in Australia ​​​​​​​with large numbers of pupils becoming dependent and even making themselves sick from using vapes. Terry Slevin from the Public Health Association of Australia has described vaping as a public health crisis as more and more young Australians become addicted to this nicotine-based product in colourful packaging that offers a variety of attractive favours. About 22% of Australians aged 18-24 have used an e-cigarette or vaping device at least once, data last year showed. It could be the cigarette market of the 1960s and 70s.  

The Australian government has responded aggressively to the vaping challenge with a range of measures to try and reduce consumption. It will be illegal for retail stores to sell vapes which will now need to be sold through pharmacies. There will be a ban on imported non-prescription vaping products, minimum quality standards on vapes and limits on the product’s nicotine concentration. Vape products will need to be in plain packaging and single-use, disposable vapes will not be allowed. The overall aim of the Australian government is to make the only way to purchase vaping products legally through pharmacies with a prescription, meaning it will end the recreational vaping market. 

The growth of vaping in many countries started with the emergence of e-cigarettes as a cigarette substitute. Many people saw e-cigarettes as a way of giving up their smoking habit. E-cigarettes did not seem to have the same health consequences as regular cigarettes and the growth of e-cigarettes was seen as a public health benefit. 

But like any market, producers of e-cigarettes saw an opportunity to grow their market. By targeting vapes to young people who liked the idea of using a product that gave them the same supposed ‘cool, rebellious image’ as cigarettes gave to their parent’s generation. So e-cigarettes or vapes found a new market in young people who would in the past have taken up smoking. 

Whilst many health professionals see vapes as less harmful than cigarettes they still carry health problems such as the risks it poses to someone's heart and circulatory system, and the way vapes can damage a person's lungs and respiratory system. Vapes can also have a negative effect on someone's teeth and gums.  

If the long-term health consequences of vaping really do adversely affect the health of users then there may well be negative externalities in terms of the impact on national health services and you can also add to that the secondary ‘vaping’ of people in the company of vapers.  

The Australian government's move to regulate the vaping market will be looked at closely by other countries that face the same public health challenges, particularly among the young. One of the key challenges the Australian government will face is whether their aggressive regulations lead to the development of a parallel market. 

Possible questions to discuss with a class

1. Would you consider vapes a demerit good?

2. How significant are the negative externalities associated with vapes?

3. How will the Australian government's regulations affect the market for vapes?

4. Discuss the advantages and disadvantages of the Australian government's regulations to deal with the market failure associated with vaping?