The Economics of Drug Control Policies

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Abstract
The major findings of this analysis are four-fold: (1) It is both possible and appropriate to examine the economic effects of drug law enforcement within the context of supply and demand analysis. (2) Supply restricting enforcement is usually undesirable because it will increase the price of the drug in question and consequently increase criminal activities. Because the demand function for drugs such as heroin approaches infinite price elasticity, supply restricting enforcement will not greatly decrease the quantity consumed. (3) Demand-restricting enforcement activities (education, rehabilitation, substitute drugs) are preferable from an a priori standpoint because they will decrease both the quantity consumed and the drug price. Lesser amounts of crime will result. (4) A system where drugs may be obtained from appropriate medical sources legally has desirable results in terms of lowering the price of the drug and lessening criminal activity. But the tolerance phenomenon and the questionable applicability of such a system to the American social framework might undermine the usefulness of this approach. Neither can we assume that the illicit market will be eliminated.