Globalization and the Price Decline of Illicit Drugs
31 Pages Posted: 22 May 2007
Date Written: May 2007
Abstract
Retail prices of major drugs like cocaine and heroin have declined dramatically during the last two decades. This price decline has tended to offset the effects of drug policies aimed at reducing drug use in major industrial countries. The main finding of this paper is that the decline in the retail prices of drugs is related to the strong decline in the intermediation margin (the difference between the retail and producer prices) in the drug business. We develop the hypothesis, and give some evidence, that globalization has been an important factor behind the decline of the intermediation margin. We conclude with some thoughts about the effects of globalization on the effectiveness of drug policies and argue that globalization may have increased the relative effectiveness of policies aiming at reducing the demand of drugs.
JEL Classification: F10, K42
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
An Empirical Analysis of Imprisoning Drug Offenders
By Ilyana Kuziemko and Steven D. Levitt
-
State Drug Control and Illicit Drug Participation
By Henry Saffer and Frank J. Chaloupka
-
The Effects of Cocaine and Heroin Prices on Drug-Related Emergency Department Visits
By Dhaval Dave
-
Demand for Illicit Drugs by Pregnant Women
By Hope Corman, Kelly Noonan, ...
-
Illicit Drug Use Among Arrestees and Drug Prices
By Dhaval Dave
-
Mental Health Parity Legislation, Cost-Sharing and Substance Abuse Treatment Admissions
By Dhaval Dave and Swati Mukerjee
-
By Pinka Chatterji and Sara Markowitz
-
Markets for Afghan Opium and Us Heroin: Modeling the Connections
-
The Market for Mules: Risk and Compensation of Cross-Border Drug Couriers
By Caleb E. Mason and David Bjerk