Contrary to one goal of drug law enforcement, cocaine prices decreased between the years 1986 and 2000. This paper discusses how arrest avoidance behavior can affect cocaine consumer and dealer response to law enforcement. Dealers may avoid arrest by incurring quick and easy sales; thus pure gram price is negatively related to dealer enforcement. Consumers avoid arrest by accepting high prices rather than search for lower prices. Thus pure gram price is increasing in consumer enforcement. Because the implications from arrest avoidance conflict with traditional models of how enforcement should affect prices, I study the relationship using empirical analysis. Using purchase level data from the Drug Enforcement Administration and legal penalty data, I find a negative and significant relationship between dealer enforcement and pure gram price, which is consistent with the intuition of arrest avoidance.
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Paper provided by Department of Economics, College of William and Mary in its series Working Papers with number
30.
Find related papers by JEL classification: I1 - Health, Education, and Welfare - - Health K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
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