The War on Drugs is Counterproductive, Once Again

Carlos Ortiz

Lecturas de Economía, 2009, issue 71, 19-42

Abstract: A two-sector general equilibrium model that included drugs as basic goods was relatively successful at explaining the waste of resources that the war on drugs incurs (Ortiz, 2003). Due to the assumption of constant productivity, the model predicted the rise of the drug price with supply repression. Yet Plan Colombia, an unparalleled effort to eradicate drug production in Colombia, had no significant effect on drug prices. In order to correct the model two sources of productivity improvement in the drugs sector are examined. The modified model helps to understand why drug prices have remained stable, why global supply and demand have not diminished, and why coca plantations were spread throughout the nation under Plan Colombia.

Keywords: Drug war; drug supply; drug demand; supply repression; basic good (search for similar items in EconPapers)
JEL-codes: I12 K42 L11 O17 O41 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (7)

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