Optimal Drug Policy in Low-Income Neighborhoods

35 Pages Posted: 5 Oct 2002

See all articles by Sheng-Wen Chang

Sheng-Wen Chang

National Chengchi University (NCCU) - Department of Public Finance

N. Edward Coulson

Pennsylvania State University, College of the Liberal Arts - Department of Economic; National Bureau of Economic Research (NBER)

Ping Wang

Washington University in St. Louis - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: October 2002

Abstract

Part of the debate over the control of drug activity in cities is concerned with the effectiveness of implementing demand- versus supply-side drug policies. This paper is motivated by the relative lack of research providing formal economic underpinning for the implementation of either policy. We construct a simple model of drug activity, in which the drug price and the distribution of population in a community are determined according to a career choice rule and a predetermined drug demand. Three potential government objectives are considered. We find that both demand- and supply-side policies have theoretical support under different community conditions. While the demand-side policy discourages active drug sellers, the supply-side policy has an additional drug-dealing replacement effect on inducing potential entry of drug dealers. In low-income neighborhoods, demand-side policy is more effective if the drug problem is more sever or if the government objective is to deter dealer entry or to promote community's aggregate income rather than minimizing active drug selling.

Suggested Citation

Chang, Sheng-Wen and Coulson, N. Edward and Wang, Ping, Optimal Drug Policy in Low-Income Neighborhoods (October 2002). NBER Working Paper No. w9248. Available at SSRN: https://ssrn.com/abstract=336364

Sheng-Wen Chang

National Chengchi University (NCCU) - Department of Public Finance ( email )

Taipei, 11623
Taiwan

N. Edward Coulson

Pennsylvania State University, College of the Liberal Arts - Department of Economic ( email )

524 Kern Graduate Building
University Park, PA 16802-3306
United States
814-863-0625 (Phone)
814-863-4775 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Ping Wang (Contact Author)

Washington University in St. Louis - Department of Economics ( email )

One Brookings Drive
St. Louis, MO 63130
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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