The Opioid Crisis and Secondary Markets: Evidence from a Laboratory Experiment

61 Pages Posted: 17 Feb 2022 Last revised: 28 Mar 2023

See all articles by Yue Deng

Yue Deng

George Mason University

Daniel Houser

Interdisciplinary Center for Economic Science

Abstract

The opioid crisis is responsible for hundreds of thousands of deaths and trillions of dollars in costs. The secondary market for opioids contributes substantially to those numbers. Nevertheless, the welfare consequences of closing secondary market distribution remain ambiguous. Although shutting down the secondary market could help alleviate the health threat induced by the drug diversions, it could also trigger increased unnecessary prescriptions. Drawing on Schnell’s (2017) model, we design a laboratory experiment to investigate how secondary markets affect patient and physician behaviors. We find that when a secondary market is present, patients visit physicians more frequently and physicians provide more prescriptions than when there is no secondary market available. Consequently, we find that shutting down this distribution channel reduces total consumption of opioids, and positively impacts overall health outcomes. Our results provide clear evidence that policies aimed at restricting secondary markets can contribute significantly to mitigating the opioid crisis.

Note:
Funding Information: This research was financed by the Interdisciplinary Center for Economic Science (ICES) at George Mason University.

Conflict of Interests: None.

Keywords: prescription opioids, secondary market, over prescription, opioid crisis

Suggested Citation

Deng, Yue and Houser, Daniel, The Opioid Crisis and Secondary Markets: Evidence from a Laboratory Experiment. Available at SSRN: https://ssrn.com/abstract=4037201 or http://dx.doi.org/10.2139/ssrn.4037201

Yue Deng (Contact Author)

George Mason University ( email )

Daniel Houser

Interdisciplinary Center for Economic Science ( email )

5th Floor, Vernon Smith Hall
George Mason University
Arlington, VA 22201
United States
7039934856 (Phone)

HOME PAGE: http://mason.gmu.edu/~dhouser/

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