Arrest Avoidance: Law Enforcement and Price of Cocaine

Beth A. Freeborn

No 30, Working Papers from Department of Economics, College of William and Mary

Abstract: Contrary to one goal of drug law enforcement, cocaine prices decreased between the years 1986 and 2000. This paper discusses how arrest avoidance behavior can affect cocaine consumer and dealer response to law enforcement. Dealers may avoid arrest by incurring quick and easy sales; thus pure gram price is negatively related to dealer enforcement. Consumers avoid arrest by accepting high prices rather than search for lower prices. Thus pure gram price is increasing in consumer enforcement. Because the implications from arrest avoidance conflict with traditional models of how enforcement should affect prices, I study the relationship using empirical analysis. Using purchase level data from the Drug Enforcement Administration and legal penalty data, I find a negative and significant relationship between dealer enforcement and pure gram price, which is consistent with the intuition of arrest avoidance.

Keywords: Drug law enforcement; Incarceration; Drug prices; Arrest Rates (search for similar items in EconPapers)
JEL-codes: I1 K4 L2 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-law and nep-reg
Date: 2006-06-08
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