I was at Jumeirah Golf Estates standing watching the golf this weekend when someone lit a Dutch cigar.
The cigar gave off a pleasant vanilla smell and several people commented on how nice it was. When I thought about it, I realised that I know quite a few people who like the smell of cigars, even if they do not smoke or like the smell of cigarettes.

Then an intriguing and somewhat counter-intuitive idea entered my head: could there be positive externalities from this man smoking his cigar?

We were outside so the passive smoking side of things was minimised to say the least and there was no one there that did’t like the smell. This is a good example of seeing market failure from a different perspective.

Of course, there is also some good evaluation in that the negative externalities are not limited to passive smoking (cost of healthcare for smokers, etc) but is there an argument here for subsidising (or at least reducing the tax rate on) cigars?