Adult smoking prevalence has been falling in the United States, down from 42.4 percent in 1965 to 24.1 percent in 1998, a 43 percent reduction. The percentage of adults who never smoked increased from 44 percent in the mid-1960s to 55 percent in 1997.1 It is not surprising then that owners of restaurants have responded to changing customer preferences by changing how they allocate their air space between smoking and non-smoking use. Restaurants without non-smoking seating sections have become exceptions. These provisions are not isolated to locations where state or local laws restrict or ban smoking and indicate an active private market in accommodation.

It has been shown that areas with lower adult smoking rates have more smoking laws and bans. It is important to note, however, that such laws have been introduced without much benefit of research on how the private market has dealt with the issue of accommodation of both smokers and non-smokers. Proponents of smoking restrictions often argue that smoking exerts a negative externality on non-smokers and that governments should control smoking through laws and bans. [Campaign for Tobacco Free Kids, 2002] Even if such externalities exist, it would appear to be useful first to ask whether, in the absence of laws, private markets work toward internalizing the externalities. An active market in accommodation might indicate that laws and bans are simply overturning, partially or totally, actions of owners that had successfully dealt with smoking-related externalities.