Juul Labs Inc, the e-cigarette giant, is coughing up $462 million to settle allegations by six US states, including New York and California, that it illegally hooked teens on its addictive products. Like bees to honey, young people were drawn in by Juul’s glamorous ads that falsely claimed their e-cigarettes were less addictive than traditional smokes.
This latest settlement brings Juul’s total payout to over $1 billion across 45 states, though they haven’t admitted to any wrongdoing. Even with a “company-wide reset” that slashed underage use by 95% since 2019, Juul’s past continues to haunt them!
While this might bring some closure, Juul is still haunted by lawsuits from states like Minnesota, Florida, Michigan, Maine, and Alaska. Their once-largest investor, Marlboro cigarette maker Altria Group Inc, also faces unresolved claims for its alleged role in Juul’s marketing.
Federal health officials revealed a chilling fact last October: an estimated 2.55 million US middle and high school students used e-cigarettes during a four-month period in 2022. The nicotine in e-cigarettes can wreak havoc on young minds, impairing attention, learning, mood, and impulse control, and possibly paving the way for future addiction to other drugs.
This cautionary tale serves as a stark reminder of the consequences of unscrupulous marketing tactics and the importance of vigilance in protecting vulnerable populations. As we ponder Juul’s fate, we must also ask ourselves: how can we prevent another teen epidemic from taking root?
THINK LIKE AN ECONOMIST!
Q1. Define market failure.
Q2. Explain the market failure in the above case study.
Q3. Analyse why vaping has negative externalities.
Q4. Discuss whether fining Juul is the most effective way to combat the negative externalities associated with teen vaping.
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