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Unintended consequences of enforcement in illicit markets

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  • Prieger, James E.
  • Kulick, Jonathan

Abstract

Legal enforcement of bans on goods can reduce the size of the black market but lead to greater violence by increasing revenue in the illicit market. However, the link between enforcement and violence is not as simple as is suggested by the textbook model, even for a competitive market. Nevertheless, under plausible assumptions more enforcement on trafficking in the illicit good leads to more violence.

Suggested Citation

  • Prieger, James E. & Kulick, Jonathan, 2014. "Unintended consequences of enforcement in illicit markets," Economics Letters, Elsevier, vol. 125(2), pages 295-297.
    • Handle: RePEc:eee:ecolet:v:125:y:2014:i:2:p:295-297
    DOI: 10.1016/j.econlet.2014.09.025
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    References listed on IDEAS

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    1. Chaloupka, Frank J. & Warner, Kenneth E., 2000. "The economics of smoking," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 29, pages 1539-1627, Elsevier.
    2. Caulkins Jonathan P & Reuter Peter & Taylor Lowell J, 2006. "Can Supply Restrictions Lower Price? Violence, Drug Dealing and Positional Advantage," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-20, January.
    3. David W. Rasmussen & Bruce L. Benson & David L. Sollars, 1993. "Spatial Competition In Illicit Drug Markets: The Consequences Of Increased Drug Law Enforcement," The Review of Regional Studies, Southern Regional Science Association, vol. 23(3), pages 219-236, Winter.
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    Cited by:

    1. James E. Prieger & Jonathan Kulick, 2018. "Cigarette Taxes And Illicit Trade In Europe," Economic Inquiry, Western Economic Association International, vol. 56(3), pages 1706-1723, July.
    2. Rajeev K. Goel & James W. Saunoris, 2019. "Cigarette smuggling: using the shadow economy or creating its own?," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 43(3), pages 582-593, July.

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    More about this item

    Keywords

    Black markets; Violence; Menthol cigarettes; Risk tax; Enforcement cost;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • H89 - Public Economics - - Miscellaneous Issues - - - Other

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