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Arrest Avoidance: Law Enforcement and the Price of Cocaine

  • Beth A. Freeborn

Contrary to one goal of drug law enforcement, cocaine prices decreased between the years 1986 and 2000. This paper discusses how arrest avoidance behavior may affect cocaine consumer and dealer response to law enforcement. Dealers avoid arrest by making quick and easy sales; thus, pure-gram price is negatively related to dealer enforcement. Consumers avoid arrest by accepting high prices rather than searching for lower prices. Thus, pure-gram price is positively related to consumer enforcement. Because the implications from arrest avoidance conflict with traditional models of how enforcement should affect prices, I also empirically examine the relationship. Using purchase-level data from the Drug Enforcement Administration and legal penalty data, I find a negative, significant relationship between dealer enforcement and pure-gram price and a positive, significant relationship between consumer enforcement and pure-gram price. Both are consistent with the intuition of arrest avoidance. (c) 2009 by The University of Chicago. All rights reserved.

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File URL: http://dx.doi.org/10.1086/592719
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Article provided by University of Chicago Press in its journal The Journal of Law and Economics.

Volume (Year): 52 (2009)
Issue (Month): 1 (02)
Pages: 19-40

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Handle: RePEc:ucp:jlawec:v:52:y:2009:i:1:p:19-40
Contact details of provider: Web page: http://www.journals.uchicago.edu/JLE/

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  1. Ilyana Kuziemko & Steven D. Levitt, 2001. "An Empirical Analysis of Imprisoning Drug Offenders," NBER Working Papers 8489, National Bureau of Economic Research, Inc.
  2. Jeff DeSimone & Matthew C. Farrelly, . "Price and Enforcement Effects on Cocaine and Marijuana Demand," Working Papers 0101, East Carolina University, Department of Economics.
  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. Desimone, Jeff, 2001. "The Effect of Cocaine Prices on Crime," Economic Inquiry, Western Economic Association International, vol. 39(4), pages 627-43, October.
  5. Steven D. Levitt & Sudhir Alladi Venkatesh, 2000. "An Economic Analysis of a Drug-Selling Gang's Finances," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 755-789.
  6. Yuan, Yuehong & Caulkins, Jonathan P., 1998. "The Effect of Variation in High-level Domestic Drug Enforcement on Variation in Drug Prices," Socio-Economic Planning Sciences, Elsevier, vol. 32(4), pages 265-276, December.
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