Crime and Drugs: An Economic Approach

Chris Doyle and Jennifer C. Smith

No 268746, Economic Research Papers from University of Warwick - Department of Economics

Abstract: We present a model which ties together rational drug consumption, taxation, crime and other drug-related externalities. Drug control policy is addressed using an optimal tax framework. Consumption, possession and production of a drug may be prohibited, legalized or decriminalized. In all regimes illicit production of a drug may take place and drug-related crime occurs. We show that illicit drug production, the price elasticity of demand for a drug, the addictive nature of a drug, the e¤ectiveness of drug enforcement strategies, and income distribution all in‡uence optimal (second best) policy. Prohibition is contrasted with decriminalization and legalization, and where legalization yields a higher welfare than prohibition we show that this can be associated with greater drug-related crime and more drug addiction. The model is discussed in the context of US National Drug Control Strategy.

Keywords: Agricultural and Food Policy; Production Economics; Public Economics (search for similar items in EconPapers)
Pages: 32
Date: 1997-04-04
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwarer:268746

DOI: 10.22004/ag.econ.268746

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