The Economics Behind the Epidemic: Afghan Opium Price and Prescription Opioids in the US
Claudio Deiana (),
Ludovica Giua and
Roberto Nisticò ()
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Claudio Deiana: Università di Cagliari and University of Essex
CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy
We investigate the effect of variations in the price of opium in Afghanistan on per capita dispensation of prescription opioids in the US. Quarterly county-level data for 2003-2016 indicate that reductions in opium prices significantly increase the quantity of opioids prescribed, and that the magnitude of the effect increases with the county's ex-ante demand for opioids. Most of the increase involves natural and semi-synthetic but not fully synthetic opioids. We further find that both opioid-related deaths and drug-related crimes increase following a decline in the opium price. Finally, firm-level analysis reveals that the stock prices and profits of opioid producers react significantly to opium price shocks. Overall, the findings suggest that supply-side economic incentives have played an important role in the opioid epidemic.
Keywords: Prescription Opioids; Drugs; Opium Price; Supply-Side Economic Incentives. (search for similar items in EconPapers)
JEL-codes: I11 I12 I18 L65 (search for similar items in EconPapers)
Date: 2019-03-15, Revised 2019-05-13
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Working Paper: The Economics behind the Epidemic: Afghan Opium Price and Prescription Opioids in the US (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:sef:csefwp:525
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