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Law enforcement and concentration in illicit drug markets

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  • Poret, Sylvaine
  • Tejedo, Cyril

Abstract

In this paper we endogenize the horizontal structure of illicit drug markets. The key assumption is that the trafficker’s probability of detection depends on his/her market share. The author show that a stricter law enforcement policy encourages traffickers to permit competitors into the market. Increasing deterrence reduces the quantities supplied by each trafficker but also induces new entry, which cancels out the decrease in individual production at the aggregated level. Equilibrium total quantity and criminal profit are independent of the law enforcement level.

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Bibliographic Info

Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 22 (2006)
Issue (Month): 1 (March)
Pages: 99-114

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Handle: RePEc:eee:poleco:v:22:y:2006:i:1:p:99-114

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Web page: http://www.elsevier.com/locate/inca/505544

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References

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  1. Gary S. Becker, 1968. "Crime and Punishment: An Economic Approach," Journal of Political Economy, University of Chicago Press, vol. 76, pages 169.
  2. Garoupa, Nuno, 2000. "The Economics of Organized Crime and Optimal Law Enforcement," Economic Inquiry, Western Economic Association International, vol. 38(2), pages 278-88, April.
  3. Skott, Peter & Thorlund Jepsen, Gunnar, 2002. "Paradoxical effects of drug policy in a model with imperfect competition and switching costs," Journal of Economic Behavior & Organization, Elsevier, vol. 48(4), pages 335-354, August.
  4. Poret, Sylvaine, 2002. "Paradoxical effects of law enforcement policies: the case of the illicit drug market," International Review of Law and Economics, Elsevier, vol. 22(4), pages 465-493, December.
  5. Marceau, Nicolas & Mongrain, Steeve, 1999. "Dissuader le crime : un survol," L'Actualité Economique, Société Canadienne de Science Economique, vol. 75(1), pages 123-147, mars-juin.
  6. Garoupa, Nuno, 1997. " The Theory of Optimal Law Enforcement," Journal of Economic Surveys, Wiley Blackwell, vol. 11(3), pages 267-95, September.
  7. Becker, Gary S & Grossman, Michael & Murphy, Kevin M, 1991. "Rational Addiction and the Effect of Price on Consumption," American Economic Review, American Economic Association, vol. 81(2), pages 237-41, May.
  8. Eatherly, Billy J, 1974. "Drug-Law Enforcement: Should We Arrest Pushers or Users?," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 210-14, Jan.-Feb..
  9. Abdala Mansour & Nicolas Marceau & Steeve Mongrain, 2006. "Gangs and Crime Deterrence," Journal of Law, Economics and Organization, Oxford University Press, vol. 22(2), pages 315-339, October.
  10. Lee, Li Way, 1993. "Would Harassing Drug Users Work?," Journal of Political Economy, University of Chicago Press, vol. 101(5), pages 939-59, October.
  11. Saffer, Henry & Chaloupka, Frank, 1999. "The Demand for Illicit Drugs," Economic Inquiry, Western Economic Association International, vol. 37(3), pages 401-11, July.
  12. Jonathan P. Caulkins, 1993. "Zero-Tolerance Policies: Do They Inhibit or Stimulate Illicit Drug Consumption?," Management Science, INFORMS, vol. 39(4), pages 458-476, April.
  13. Robert Burrus, 1999. "Do efforts to reduce the supply of illicit drugs increase turf war violence? a theoretical analysis," Journal of Economics and Finance, Springer, vol. 23(3), pages 226-234, September.
  14. Chiu, Stephen & Mansley, Edward C. & Morgan, John, 1998. "Choosing the right battlefield for the war on drugs: an irrelevance result," Economics Letters, Elsevier, vol. 59(1), pages 107-111, April.
  15. Gilbert, Richard & Vives, Xavier, 1986. "Entry Deterrence and the Free Rider Problem," Review of Economic Studies, Wiley Blackwell, vol. 53(1), pages 71-83, January.
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Cited by:
  1. Adam Jacobsson & Alberto Naranjo, 2009. "Counter-intuitive effects of domestic law enforcement policies in the United States," Economics of Governance, Springer, vol. 10(4), pages 323-343, November.
  2. Sylvaine Poret, 2005. "An Optimal Anti-Drug Law Enforcement Policy," Working Papers 2005-17, Centre de Recherche en Economie et Statistique.
  3. Slim, Sadri, 2009. "Du refus de vente au don: une explication de la formation du prix par l´affect
    [From rejection of exchange to gift: regard as an explanation of prices]
    ," MPRA Paper 15317, University Library of Munich, Germany, revised 24 Apr 2009.
  4. Sylvaine Poret, 2006. "L'impact des politiques répressives sur l'offre de drogues illicites. Une revue de la littérature théorique," Revue économique, Presses de Sciences-Po, vol. 57(5), pages 1065-1091.
  5. Naranjo, Alberto J., 2010. "Spillover effects of domestic law enforcement policies," International Review of Law and Economics, Elsevier, vol. 30(3), pages 265-275, September.
  6. Carlos Casacuberta & Mariana Gerstenblüth & Patricia Triunfo, 2012. "Aportes del análisis económico al estudio de las drogas," Documentos de Trabajo (working papers) 0112, Department of Economics - dECON.

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