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The Effect of Drug Prohibition on Drug Prices: Evidence from the Markets for Cocaine and Heroin

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Jeffrey A. Miron

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Abstract

This paper examines the effect of drug prohibition on the black market prices of cocaine and heroin. The paper examines the ratio of retail to farmgate price for cocaine, heroin, and several legal goods, and it compares legal versus black market prices for cocaine and heroin. The results suggest that cocaine and heroin are substantially more expensive than they would be in a legalized market, but to a lesser degree than suggested in previous research.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9689.

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Date of creation: May 2003
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Handle: RePEc:nbr:nberwo:9689

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Find related papers by JEL classification:
H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
H29 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other

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  1. Kenneth W. Clements & Xueyan Zhao, 2005. "Economic Aspects of Marijuana," Economics Discussion / Working Papers 05-28, The University of Western Australia, Department of Economics. [Downloadable!]
  2. Michael Grossman, 2004. "Individual Behaviors and Substance Use: The Role of Price," NBER Working Papers 10948, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Gathmann, Christina, 2004. "The Effects of Enforcement on Illegal Markets: Evidence from Migrant Smuggling along the Southwestern Border," IZA Discussion Papers 1004, Institute for the Study of Labor (IZA). [Downloadable!]
  4. Kenneth W. Clements, 2004. "Three Facts About Marijuana Prices," Economics Discussion / Working Papers 04-06, The University of Western Australia, Department of Economics. [Downloadable!]
  5. Kenneth W. Clements & Yihui Lan & Xueyan Zhao, 2005. "The Demand for Vice: Inter-Commodity Interactions with Uncertainty," Economics Discussion / Working Papers 05-30, The University of Western Australia, Department of Economics. [Downloadable!]
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  6. Jeremy Arkes & Rosalie Liccardo Pacula & Susan M. Paddock & Jonathan P. Caulkins & Peter Reuter, 2008. "Why the DEA STRIDE Data are Still Useful for Understanding Drug Markets," NBER Working Papers 14224, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. 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. [Downloadable!]
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