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Drug Decriminalization and the Price of Illicit Drugs

Sónia Félix and Pedro Portugal

No 8848, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This study is an empirical assessment of the impact of the drug decriminalization policy followed by Portugal in July, 2001. We investigate especially the impact of the policy change on the price of illicit drugs. The analysis is performed using a difference-in-differences approach and a comprehensive set of countries as control group. We also investigate the application of Synthetic Control Method in order to construct a synthetic control unit from a convex combination of other countries. The results suggest that the prices of opiates and cocaine in the post-treatment period did not decrease in the sequence of the policy change. This result contrasts with the argument that softer drug law enforcement necessarily leads to lower prices and, consequently, to higher drug usage rates and dependence.

Keywords: illicit drugs; drug decriminalization policy; drug prices; treatment effects (search for similar items in EconPapers)
JEL-codes: C21 D04 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2015-02
New Economics Papers: this item is included in nep-law
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Published in: International Journal of Drug Policy, 2017, 39, 121-129

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