Optimal Drug Policy in Low-Income Neighborhoods

Sheng-Wen Chang, N. Edward Coulson and Ping Wang

No 9248, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Part of the debate over the control of drug activity in cities is concerned with the effectiveness of implementing demand- versus supply-side drug policies. This paper is motivated by the relative lack of research providing formal economic underpinning for the implementation of either policy. We construct a simple model of drug activity, in which the drug price and the distribution of population in a community are determined according to a career choice rule and a predetermined drug demand. Three potential government objectives are considered. We find that both demand- and supply-side policies have theoretical support under different community conditions. While the demand-side policy discourages active drug sellers, the supply-side policy has an additional drug-dealing replacement effect on inducing potential entry of drug dealers. In low-income neighborhoods, demand-side policy is more effective if the drug problem is more sever or if the government objective is to deter dealer entry or to promote community's aggregate income rather than minimizing active drug selling.

JEL-codes: D60 J60 (search for similar items in EconPapers)
Date: 2002-10
New Economics Papers: this item is included in nep-hea, nep-law, nep-pub and nep-ure
Note: EH
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Citations: View citations in EconPapers (2)

Published as SHENG-WEN CHANG & N. EDWARD COULSON & PING WANG, 2016. "Optimal Drug Policy in Low-Income Neighborhoods," Journal of Public Economic Theory, vol 18(5), pages 726-751.

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