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Price and Enforcement Effects on Cocaine and Marijuana Demand

  • Jeff DeSimone

    ()

    (National Bureau of Economic Research, and Assistant Professor, Department of Economics, East Carolina University, Greenville, NC 27858.)

  • Matthew C. Farrelly

    ()

    (Tobacco Use Research Program, Center for Interdisciplinary Substance Abuse Research, Research Triangle Institute, Research Triangle Park, NC 27709.)

This article estimates equations for past year cocaine and marijuana use among adult and juvenile respondents of the 1990--97 National Household Surveys on Drug Abuse. Unlike most previous studies, we control for the monetary price of marijuana, probabilities of arrest for marijuana and cocaine possession, and state fixed effects. Results indicate that cocaine prices are inversely related to adult cocaine and marijuana demand but are unrelated to juvenile drug demand, marijuana price effects are always statistically insignificant, estimated price effects are inflated when state effects are omitted, and increases in each arrest probability diminish both types of drug use. Copyright 2003, Oxford University Press.

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Article provided by Western Economic Association International in its journal Economic Inquiry.

Volume (Year): 41 (2003)
Issue (Month): 1 (January)
Pages: 98-115

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Handle: RePEc:oup:ecinqu:v:41:y:2003:i:1:p:98-115
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  1. Jeffrey DeSimone, 1999. "The Effect of Cocaine Prices on Crime," Working Papers 9907, East Carolina University, Department of Economics.
  2. Grossman, Michael & Chaloupka, Frank J., 1998. "The demand for cocaine by young adults: a rational addiction approach," Journal of Health Economics, Elsevier, vol. 17(4), pages 427-474, August.
  3. Bruce L. Benson & David W. Rasmussen, 1991. "Relationship Between Illicit Drug Enforcement Policy And Property Crimes," Contemporary Economic Policy, Western Economic Association International, vol. 9(4), pages 106-115, October.
  4. Nisbet, Charles T & Vakil, Firouz, 1972. "Some Estimates of Price and Expenditure Elasticities of Demand for Marijuana Among U.C.L.A. Students," The Review of Economics and Statistics, MIT Press, vol. 54(4), pages 473-75, November.
  5. Henry Saffer & Frank J. Chaloupka, 1999. "Demographic Differentials in the Demand for Alcohol and Illicit Drugs," NBER Chapters, in: The Economic Analysis of Substance Use and Abuse: An Integration of Econometrics and Behavioral Economic Research, pages 187-212 National Bureau of Economic Research, Inc.
  6. Saffer, Henry & Chaloupka, Frank, 1999. "The Demand for Illicit Drugs," Economic Inquiry, Western Economic Association International, vol. 37(3), pages 401-11, July.
  7. Frank J. Chaloupka & Michael Grossman & John A. Tauras, 1999. "The Demand for Cocaine and Marijuana by Youth," NBER Chapters, in: The Economic Analysis of Substance Use and Abuse: An Integration of Econometrics and Behavioral Economic Research, pages 133-156 National Bureau of Economic Research, Inc.
  8. Farrelly, Matthew C. & Bray, Jeremy W. & Zarkin, Gary A. & Wendling, Brett W., 2001. "The joint demand for cigarettes and marijuana: evidence from the National Household Surveys on Drug Abuse," Journal of Health Economics, Elsevier, vol. 20(1), pages 51-68, January.
  9. Frank J. Chaloupka & Henry Wechsler, 1995. "Price, Tobacco Control Policies and Smoking Among Young Adults," NBER Working Papers 5012, National Bureau of Economic Research, Inc.
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