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Modelling drug market supply disruptions: Where do all the drugs not go?


  • Caulkins, Jonathan P.
  • Hao, Haijing


Drug producing regions often supply several geographically distinct drug consumption markets. Disruptions of opium cultivation in Afghanistan and cocaine production in Colombia show that consumption reductions can be much smaller in some final markets than are reductions in cultivation. This paper derives a model for predicting how production deficits will be "allocated" across downstream markets in the form of reduced use. Plausible parameterization suggests that for cocaine, markets outside the US may serve as a sort of "shock absorber", partially shielding US markets from sharp fluctuations in consumption. One implication is that multi-lateral efforts may be appropriate for source country control.

Suggested Citation

  • Caulkins, Jonathan P. & Hao, Haijing, 2008. "Modelling drug market supply disruptions: Where do all the drugs not go?," Journal of Policy Modeling, Elsevier, vol. 30(2), pages 251-270.
  • Handle: RePEc:eee:jpolmo:v:30:y:2008:i:2:p:251-270

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    References listed on IDEAS

    1. Dave, Dhaval, 2006. "The effects of cocaine and heroin price on drug-related emergency department visits," Journal of Health Economics, Elsevier, vol. 25(2), pages 311-333, March.
    2. Jeff Desimone, 2006. "The Relationship Between Illegal Drug Prices At The Retail User And Seller Levels," Contemporary Economic Policy, Western Economic Association International, vol. 24(1), pages 64-73, January.
    3. Jeff DeSimone & Matthew C. Farrelly, 2003. "Price and Enforcement Effects on Cocaine and Marijuana Demand," Economic Inquiry, Western Economic Association International, vol. 41(1), pages 98-115, January.
    4. Dhaval Dave, 2004. "Illicit Drug Use Among Arrestees and Drug Prices," NBER Working Papers 10648, National Bureau of Economic Research, Inc.
    5. Jonathan P. Caulkins, 1997. "Modeling the Domestic Distribution Network for Illicit Drugs," Management Science, INFORMS, vol. 43(10), pages 1364-1371, October.
    6. Jeffrey DeSimone, 1999. "The Relationship Between Marijuana Prices at Different Market Levels," Working Papers 9915, East Carolina University, Department of Economics.
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    Cited by:

    1. Daniel Mejía & Pascual Restrepo, 2008. "The War on Illegal Drug Production and Trafficking: An Economic Evaluation of Plan Colombia," DOCUMENTOS CEDE 005123, UNIVERSIDAD DE LOS ANDES-CEDE.
    2. repec:eee:jpolmo:v:39:y:2017:i:5:p:741-761 is not listed on IDEAS

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