Risks and Prices: The Role of User Sanctions in Marijuana Markets
User sanctions influence the legal risk for participants in illegal drug markets. A change in user sanctions may change retail drug prices, depending on how it changes the legal risk to users, how it changes the legal risk to dealers, and the slope of the supply curve. Using a novel dataset with rich transaction-level information, this paper evaluates the impact of recent changes in user sanctions for marijuana on marijuana prices. The results suggest that lower legal risks for users are associated with higher marijuana prices in the short-run, which ceteris paribus, implies higher profits for drug dealers. Additionally, the findings have important implications for thinking about the slope of the supply curve and interpreting previous research on the effect of drug laws on demand for marijuana.
|Date of creation:||Sep 2007|
|Date of revision:|
|Publication status:||published as Rosalie Liccardo Pacula & Beau Kilmer & Michael Grossman & Frank J. Chaloupka, 2010. "Risks and Prices: The Role of User Sanctions in Marijuana Markets," The B.E. Journal of Economic Analysis & Policy, Berkeley Electronic Press, vol. 10(1).|
|Contact details of provider:|| Postal: |
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jeff DeSimone & Matthew C. Farrelly, .
"Price and Enforcement Effects on Cocaine and Marijuana Demand,"
0101, East Carolina University, Department of Economics.
- Jeff DeSimone & Matthew C. Farrelly, 2003. "Price and Enforcement Effects on Cocaine and Marijuana Demand," Economic Inquiry, Western Economic Association International, vol. 41(1), pages 98-115, January.
- J. Williams & Rosalie Liccardo Pacula & Frank J. Chaloupka & Henry Wechsler, 2004.
"Alcohol and marijuana use among college students: economic complements or substitutes?,"
John Wiley & Sons, Ltd., vol. 13(9), pages 825-843.
- Jenny Williams & Rosalie Liccardo Pacula & Frank J. Chaloupka & Henry Wechsler, 2001. "Alcohol and Marijuana Use Among College Students: Economic Complements or Substitutes?," NBER Working Papers 8401, National Bureau of Economic Research, Inc.
- Patrick M. O'Malley & Michael Grossman & Frank J. Chaloupka, 2001.
"Marijuana and Youth,"
in: Risky Behavior among Youths: An Economic Analysis, pages 271-326
National Bureau of Economic Research, Inc.
- Gary S. Becker & Kevin M. Murphy & Michael Grossman, 2004. "The Economic Theory of Illegal Goods: The Case of Drugs," NBER Working Papers 10976, National Bureau of Economic Research, Inc.
- Breusch, T S & Pagan, A R, 1979. "A Simple Test for Heteroscedasticity and Random Coefficient Variation," Econometrica, Econometric Society, vol. 47(5), pages 1287-94, September.
- 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.
- Jonathan P. Caulkins, 1997. "Modeling the Domestic Distribution Network for Illicit Drugs," Management Science, INFORMS, vol. 43(10), pages 1364-1371, October.
- Saffer, Henry & Chaloupka, Frank, 1999.
"The Demand for Illicit Drugs,"
Western Economic Association International, vol. 37(3), pages 401-11, July.
- Caulkins Jonathan P., 1995. "Domestic Geographic Variation in Illicit Drug Prices," Journal of Urban Economics, Elsevier, vol. 37(1), pages 38-56, January.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:13415. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.