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The War on Illegal Drugs in Producer and Consumer Countries: A simple analytical framework

  • Daniel Mejia

    ()

  • Pascual Restrepo

    ()

This paper develops a simple model of the war against illegal drugs in producer and consumer countries. Our analysis shows how the equilibrium quantity of illegal drugs, as well as their price, depends on key parameters of the model, among them the price elasticity of demand, and the effectiveness of the resources allocated to enforcement and prevention and treatment policies. Importantly, this paper studies the trade-off faced by drug consumer country`s government between prevention policies (aimed at reducing the demand for illegal drugs) and enforcement policies (aimed at reducing the production and trafficking of illegal drugs in producer countries). We use available data for the war against cocaine production and trafficking in Colombia, and that against consumption in the U.S. in order to calibrate the unobservable parameters of the model. Among these are the effectiveness of prevention and treatment policies in reducing the demand for cocaine; the relative effectiveness of interdiction efforts at reducing the amount of cocaine reaching consumer countries; and the cost of illegal drug production and trafficking activities in producer countries.

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File URL: http://economia.uniandes.edu.co/publicaciones/dcede2011-02.pdf
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Paper provided by UNIVERSIDAD DE LOS ANDES-CEDE in its series DOCUMENTOS CEDE with number 007960.

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Length: 31
Date of creation: 01 Feb 2011
Date of revision:
Handle: RePEc:col:000089:007960
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  1. Gary S. Becker & Kevin M. Murphy & Michael Grossman, 2006. "The Market for Illegal Goods: The Case of Drugs," Journal of Political Economy, University of Chicago Press, vol. 114(1), pages 38-60, February.
  2. Daniel Mejía & Pascual Restrepo, 2008. "The War on Illegal Drug Production and Trafficking: An Economic Evaluation of Plan Colombia," DOCUMENTOS CEDE 005123, UNIVERSIDAD DE LOS ANDES-CEDE.
  3. Mejia, Daniel & Posada, Carlos Esteban, 2008. "Cocaine production and trafficking : what do we know ?," Policy Research Working Paper Series 4618, The World Bank.
  4. Cláudia Costa Storti & Paul De Grauwe, 2007. "Globalization and the Price Decline of Illicit Drugs," CESifo Working Paper Series 1990, CESifo Group Munich.
  5. Skaperdas, Stergios, 1996. "Contest Success Functions," Economic Theory, Springer, vol. 7(2), pages 283-90, February.
  6. Herschel Grossman & Daniel Mejía, 2008. "The war against drug producers," Economics of Governance, Springer, vol. 9(1), pages 5-23, January.
  7. Hirshleifer, Jack, 1991. "The Technology of Conflict as an Economic Activity," American Economic Review, American Economic Association, vol. 81(2), pages 130-34, May.
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