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El mercado de bienes ilegales: el caso de la droga

Author

Listed:
  • Gary S. Becker

    () (Universidad de Chicago)

  • Kevin M. Murphy

    () (Universidad de Chicago)

  • Michael Grossman

    () (City University of New York Graduate Center)

Abstract

This paper considers the costs of reducing consumption of goods by making their production illegal and punishing illegal producers. We use illegal drugs as a prominent example. We show that the more inelastic either demand for or supply of goods is, the greater the increase in social cost from further reducing its production by greater enforcement efforts. So, optimal public expenditures on the apprehension and conviction of illegal suppliers depend not only on the difference between the social and private values of consumption, but also on this elasticity. When demand and supply are no so elastic, it does not pay to enforce any prohibition unless the social value is negative. We also show that a monetary tax could cause a greater reduction in output and increase in price than optimal enforcement against the same goods if it were illegal, even though some producers may go underground to avoid a monetary tax. When enforcement is costly, excise taxes and quantity restrictions are not equivalent.

Suggested Citation

  • Gary S. Becker & Kevin M. Murphy & Michael Grossman, 2006. "El mercado de bienes ilegales: el caso de la droga," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 8(15), pages 17-42, July-Dece.
  • Handle: RePEc:rei:ecoins:v:8:y:2006:i:15:p:17-42
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    File URL: http://www.uexternado.edu.co/facecono/ecoinstitucional/workingpapers/gbecker15.pdf
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    References listed on IDEAS

    as
    1. Gary S. Becker & Kevin M. Murphy, 1993. "A Simple Theory of Advertising as a Good or Bad," The Quarterly Journal of Economics, Oxford University Press, vol. 108(4), pages 941-964.
    2. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters,in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
    3. 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.
    4. MacCoun,Robert J. & Reuter,Peter, 2001. "Drug War Heresies," Cambridge Books, Cambridge University Press, number 9780521799973, March.
    5. repec:hrv:faseco:33078975 is not listed on IDEAS
    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. Becker, Gary S & Murphy, Kevin M, 1988. "A Theory of Rational Addiction," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 675-700, August.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Leonardo Raffo López, 2010. "Narcotráfico y conflicto: ¿por qué bajó el precio de la cocaína?," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 12(23), pages 229-258, July-Dece.
    2. Leonardo Raffo López & José Luis Segura, 2015. "Las redes del narcotráfico y sus interacciones: un modelo teórico," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 17(32), pages 183-212, January-J.
    3. Luis Eduardo Sandoval & Ángela López & Camilo Cárdenas, 2009. "Determinantes y características de la oferta de cocaína en Colombia (1989 - 2006)," REVISTA FACULTAD DE CIENCIAS ECONÓMICAS, UNIVERSIDAD MILITAR NUEVA GRANADA, December.
    4. Leonardo Raffo López & Javier Andrés Castro & Alexander Díaz España, 2016. "Los efectos globo en los cultivos de coca en la región andina (1990-2009)," REVISTA APUNTES DEL CENES, UNIVERSIDAD PEDAGOGICA Y TECNOLOGICA DE COLOMBIA, vol. 35(61), pages 207-2036, January.

    More about this item

    Keywords

    illegal goods; illegal producers; drugs; monetary tax; decriminalization; elasticity; social cost;

    JEL classification:

    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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