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The Effect of Cocaine Prices on Crime

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  • Desimone, Jeff

Abstract

The relationship between cocaine prices and crime has critical implications for U.S. drug policy, but is theoretically indeterminate because cocaine price changes affect crime through changes in both cocaine consumption and expenditures. This paper investigates this relationship in annual data from 1981-95 on 29 large U.S. cities, accounting for simultaneity by using two-stage least squares with measures of wholesale supply factors and retail enforcement intensity as instruments for cocaine prices. Controlling for prices of other drugs, deterrence, socioeconomic factors, and city and year-specific effects, a strong negative relationship exists between cocaine prices and six of seven FBI index crimes. Copyright 2001 by Oxford University Press.

Suggested Citation

  • Desimone, Jeff, 2001. "The Effect of Cocaine Prices on Crime," Economic Inquiry, Western Economic Association International, vol. 39(4), pages 627-643, October.
  • Handle: RePEc:oup:ecinqu:v:39:y:2001:i:4:p:627-43
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    Cited by:

    1. Christopher Carpenter & Carlos Dobkin, 2010. "Alcohol Regulation and Crime," NBER Chapters,in: Controlling Crime: Strategies and Tradeoffs, pages 291-329 National Bureau of Economic Research, Inc.
    2. Markowitz, Sara, 2005. "Alcohol, Drugs and Violent Crime," International Review of Law and Economics, Elsevier, vol. 25(1), pages 20-44, March.
    3. Hope Corman & Naci Mocan, 2015. "Alcohol Consumption, Deterrence and Crime in New York City," Journal of Labor Research, Springer, vol. 36(2), pages 103-128, June.
    4. Beth A. Freeborn, 2009. "Arrest Avoidance: Law Enforcement and the Price of Cocaine," Journal of Law and Economics, University of Chicago Press, vol. 52(1), pages 19-40, February.
    5. Cook, Philip J. & Durrance, Christine Piette, 2013. "The virtuous tax: Lifesaving and crime-prevention effects of the 1991 federal alcohol-tax increase," Journal of Health Economics, Elsevier, vol. 32(1), pages 261-267.
    6. Barrie M. Craven & Michael L. Marlow & Alden F. Shiers, 2013. "The Economics of Minimum Pricing for Alcohol," Economic Affairs, Wiley Blackwell, vol. 33(2), pages 174-189, June.
    7. Mireia Jofre-Bonet & Jody L. Sindelar, 2002. "Drug Treatment as a Crime Fighting Tool," NBER Working Papers 9038, National Bureau of Economic Research, Inc.
    8. Philip J. Cook & Christine Piette Durrance, 2011. "The Virtuous Tax: Lifesaving and Crime-Prevention Effects of the 1991 Federal Alcohol-Tax Increase," NBER Working Papers 17709, National Bureau of Economic Research, Inc.
    9. 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.
    10. Kuziemko, Ilyana & Levitt, Steven D., 2004. "An empirical analysis of imprisoning drug offenders," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 2043-2066, August.
    11. Rosalie Liccardo Pacula & Beau Kilmer, 2003. "Marijuana and Crime: Is there a Connection Beyond Prohibition?," NBER Working Papers 10046, National Bureau of Economic Research, Inc.
    12. Sara Markowitz & Erik Nesson & Eileen Poe-Yamagata & Curtis Florence & Partha Deb & Tracy Andrews & Sarah Beth L. Barnett, 2012. "Estimating the Relationship between Alcohol Policies and Criminal Violence and Victimization," German Economic Review, Verein für Socialpolitik, vol. 13(4), pages 416-435, November.
    13. Sara Markowitz, 2000. "An Economic Analysis of Alcohol, Drugs, and Violent Crime in the National Crime Victimization Survey," NBER Working Papers 7982, National Bureau of Economic Research, Inc.

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