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What Price Prohibition? An Estimate of the Costs of Australian Drug Policy


  • Robert E. Marks

    (Australian Graduate School of Management, University of New South Wales, P.O. Box 1, Kensington NSW 2033.)


The prohibition against Australians using illicit drugs is ineffective, but still imposes a high burden on government revenues and indirectly contributes (because of its ineffectiveness) to additional costs paid by Australian households. These are the claims of those who argue for a change in policy in Australia towards illicit drugs and their use. How much does present policy cost the Australian taxpayer? To what extent does the ineffectiveness of the law in preventing illicit drug use indirectly add to costs paid by Australian households? We argue that the Cleeland Report underestimates the true costs of the law enforcement against illicit drug use by a factor of at least two. We argue that a large proportion of these costs would be eliminated if the drugs were made available, at cost, to regulated drug users. We estimate a total annual cost to Australia of $776 million, as well as forced transfers of $656 million (in 1987–88).

Suggested Citation

  • Robert E. Marks, 1991. "What Price Prohibition? An Estimate of the Costs of Australian Drug Policy," Australian Journal of Management, Australian School of Business, vol. 16(2), pages 187-212, December.
  • Handle: RePEc:sae:ausman:v:16:y:1991:i:2:p:187-212

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    References listed on IDEAS

    1. Clements, Kenneth W, 1981. "Changes in the Size of the Traded Goods Sector: Theory and Applications," Empirical Economics, Springer, vol. 6(4), pages 203-213.
    2. Clements, Kenneth W & Nguyen, Phuong, 1980. "Money Demand, Consumer Demand and Relative Prices in Australia," The Economic Record, The Economic Society of Australia, vol. 56(155), pages 338-346, December.
    3. Meisner, James F., 1979. "Divisia moments of U.S. industry, 1947-1978," Economics Letters, Elsevier, vol. 4(3), pages 239-242.
    4. Suhm, Frederick E., 1979. "A cross-country consumption comparison based on divisia variances and covariances," Economics Letters, Elsevier, vol. 3(1), pages 89-96.
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