This paper gives a theoretical base to the vertical structure of the distribution network of illicit drugs by using the analysis of vertical relationships and the illegal character of the drug traffic. The model is then used to show how the regulator, through law enforcement costs imposed on drugs sellers, can implement the optimal structure. We show that the vertically separated network, .first best optimal structure, a very often noticed structure on drugs market, can never be implementable.
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Article provided by De Boeck Université in its journal Recherches économiques de Louvain.
Volume (Year): 71 (2005)
Issue (Month): 4 ()
Pages: 391-412
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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.: - Joseph J. Spengler, 1950.
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2005-17, Centre de Recherche en Economie et Statistique, revised 2005.
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- Chiu, Stephen & Mansley, Edward C. & Morgan, John, 1998.
"Choosing the right battlefield for the war on drugs: an irrelevance result,"
Economics Letters,
Elsevier, vol. 59(1), pages 107-111, April.
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- Becker, Gary S & Murphy, Kevin M, 1988.
"A Theory of Rational Addiction,"
Journal of Political Economy,
University of Chicago Press, vol. 96(4), pages 675-700, August.
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