Advanced Search
MyIDEAS: Login

Marijuana on main street: What if?

Contents:

Author Info

  • Liana Jacobi
  • Michelle Sovinsky
Registered author(s):

    Abstract

    Illicit drug use is prevalent around the world. While the nature of the market makes it difficult to determine the total sales worldwide with certainty, estimates suggest sales are around $150 billion a year in the United States alone. Among illicit drugs marijuana is the most commonly used, where the US government spends upwards of $7.7 billion per year in enforcement of the laws for marijuana sales (Miron, 2005). For the past 30 years there has been a debate regarding whether marijuana should be legalized. There are two important avenues through which legalization could impact use: legalization would make marijuana easier to get, and it would remove the stigma (and cost) associated with illegal behavior. Studies to date have not disentangled the impact of limited accessibility from consumption decisions based solely on preferences. However, this distinction is particularly important in the market for cannabis as legalizing the drug would impact accessibility. Hence, if most individuals do not use because they don't know where to buy it, but would otherwise use, we would see a large increase in consumption ceteris paribus, which would be important to consider for policy. On the other hand, if accessibility plays little role in consumption decisions, then making drugs more readily available would impact the supply more. In order to access the impact of legalization on use, it is necessary to explicitly consider the role played by accessibility in use, the impact of illegal actions in utility, as well as the impact on the supply side. In this paper, we develop and estimate a model of buyer behavior that explicitly considers the impact of illegal behavior on utility as well as the impact of limited accessibility (either knowing where to buy or being offered) an illicit drug on using the drug. We use the demand side estimates to conduct counterfactuals on how use would change under a policy of legalization. We conduct counterfactuals under di¤erent assumptions regarding how legalization would impact the supply as well as various tax policies on the price of cannabis.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.econ.uzh.ch/static/wp/econwp087.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by Department of Economics - University of Zurich in its series ECON - Working Papers with number 087.

    as in new window
    Length:
    Date of creation: Jul 2012
    Date of revision:
    Handle: RePEc:zur:econwp:087

    Contact details of provider:
    Postal: Blümlisalpstrasse 10, CH-8006 Zürich
    Phone: +41-1-634 22 05
    Fax: +41-1-634 49 07
    Email:
    Web page: http://www.econ.uzh.ch/
    More information through EDIRC

    Related research

    Keywords:

    This paper has been announced in the following NEP Reports:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. van Ours, Jan C, 2001. "Is Cannabis a Stepping-Stone for Cocaine?," CEPR Discussion Papers 3116, C.E.P.R. Discussion Papers.
    2. Manolis Galenianos & Rosalie Liccardo Pacula & Nicola Persico, 2012. "A Search-Theoretic Model of the Retail Market for Illicit Drugs," Review of Economic Studies, Oxford University Press, vol. 79(3), pages 1239-1269.
    3. R. Pacula & N. Persico & M. Galenianos, 2007. "A Search-Theoretic Model of the Retail Market for Illegal Drugs," 2007 Meeting Papers 197, Society for Economic Dynamics.
    4. Kannika Damrongplasit & Cheng Hsiao, 2009. "Decriminalization Policy And Marijuana Smoking Prevalence: A Look At The Literature," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 54(04), pages 621-644.
    5. Damrongplasit, Kannika & Hsiao, Cheng & Zhao, Xueyan, 2010. "Decriminalization and Marijuana Smoking Prevalence: Evidence From Australia," Journal of Business & Economic Statistics, American Statistical Association, vol. 28(3), pages 344-356.
    6. Edward L. Glaeser & Andrei Shleifer, 2001. "A Reason for Quantity Regulation," American Economic Review, American Economic Association, vol. 91(2), pages 431-435, May.
    7. Michelle Sovinsky Goeree, 2005. "Advertising in the US Personal Computer Industry," Industrial Organization 0503002, EconWPA.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:zur:econwp:087. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marita Kieser).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.