The War on Illegal Drugs in Producer and Consumer Countries: A Simple Analytical Framework

31 Pages Posted: 21 Feb 2011  

Daniel Mejia

Universidad de los Andes, Colombia - Department of Economics

Pascual Restrepo

Boston University - Department of Economics

Date Written: February 1, 2011

Abstract

This paper develops a simple model of the war against illegal drugs in producer and consumer countries. Our analysis shows how the equilibrium quantity of illegal drugs, as well as their price, depends on key parameters of the model, among them the price elasticity of demand, and the effectiveness of the resources allocated to enforcement and prevention and treatment policies. Importantly, this paper studies the trade-off faced by drug consumer country's government between prevention policies (aimed at reducing the demand for illegal drugs) and enforcement policies (aimed at reducing the production and trafficking of illegal drugs in producer countries). We use available data for the war against cocaine production and trafficking in Colombia, and that against consumption in the U.S. in order to calibrate the unobservable parameters of the model. Among these are the effectiveness of prevention and treatment policies in reducing the demand for cocaine; the relative effectiveness of interdiction efforts at reducing the amount of cocaine reaching consumer countries; and the cost of illegal drug production and trafficking activities in producer countries.

Keywords: war on drugs, conflict, enforcement, treatment and prevention policies, Plan Colombia

JEL Classification: D74, K42

Suggested Citation

Mejia, Daniel and Restrepo, Pascual, The War on Illegal Drugs in Producer and Consumer Countries: A Simple Analytical Framework (February 1, 2011). Documento CEDE No. 2011-02. Available at SSRN: https://ssrn.com/abstract=1764005 or http://dx.doi.org/10.2139/ssrn.1764005

Daniel Mejia (Contact Author)

Universidad de los Andes, Colombia - Department of Economics ( email )

Carrera 1 No. 18 A - 10
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Colombia
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HOME PAGE: http://economia.uniandes.edu.co/share/scripts/home/home.php

Pascual Restrepo

Boston University - Department of Economics ( email )

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