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Trafficking in drugs and economic theory

Sati Pandey ()

MPRA Paper from University Library of Munich, Germany

Abstract: The focus of this study is on black markets which provide an important segment of the parallel economy. These markets operate in disequilibrium,search and information costs become very important.Trafficking in drugs taken as case, to explore both theoretically and empirically. The problem, studied some twenty years back has been accentuating gradually world over. It is still a pressing problem of our civilization which needs to be tackled immediately and this requires a clear understanding of the problem and based on that,effective policy formulation and enforcement.We find that psycho-physiological dependence in abusers make their economic budget constraint 'redundant' thereby leading to completely inelastic demand schedules.Increasing cost of Police surveillance yields diminishing returns in terms of deterrence.There are secondary crimes as a result.By using developments in other human sciences, study opens the road leading to more realistic economic theory.

Keywords: Drugs; neuropsychology; physiological economics; disequilibrium; dynamics; price theory; information; pressure; suction; market Tension; adjustment processes; black market (search for similar items in EconPapers)
JEL-codes: A10 A23 B41 C02 C65 D01 D03 D11 D21 D23 D43 D51 D63 D78 D81 D82 D83 D84 D85 D86 D87 E26 E61 H26 H73 H87 I0 (search for similar items in EconPapers)
Date: 1991-03-14
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Published in ISBN 81-85694-10-9 (1994): pp. 74-160

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