Marijuana on Main Street? Estimating Demand in Markets with Limited Access

Liana Jacobi and Michelle Sovinsky

American Economic Review, 2016, vol. 106, issue 8, 2009-45

Abstract: Marijuana is the most common illicit drug with vocal advocates for legalization. Among other things, legalization would increase access and remove the stigma of illegality. Our model disentangles the role of access from preferences and shows that selection into access is not random. We find that traditional demand estimates are biased resulting in incorrect policy conclusions. If marijuana were legalized, those under 30 would see modest increases in use of 28 percent, while on average use would increase by 48 percent (to 19.4 percent). Tax policies are effective at curbing use, where Australia could raise AU$1 billion (and the United States US$12 billion).

JEL-codes: D12 H25 K14 K42 (search for similar items in EconPapers)
Date: 2016
Note: DOI: 10.1257/aer.20131032
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Citations: View citations in EconPapers (39)

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