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Quantitative Restrictions On The Flow Of Narcotics: Supply And Demand Restraints In A North-South Macro-Model

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  • S. Mansoob Murshed

Abstract

This paper constructs a macroeconomic model of North-South interaction where the flow of narcotics from the South to the North is restricted. The economic effects are akin to quantitative restrictions in trade policy. Two alternative policy scenarios will be considered. One involves reducing the supply of drugs at the source, accompanied by aid. Supply-side restrictions have negative aggregate supply-side effects in the producing region, because of the monopoly rents generated from that type of control. This makes them a second-best policy, particularly if the accompanying aid is not used for poverty alleviation and fails to expand domestic aggregate demand. Alternatively, demand side restrictions will be found to be superior.

Suggested Citation

  • S. Mansoob Murshed, 2005. "Quantitative Restrictions On The Flow Of Narcotics: Supply And Demand Restraints In A North-South Macro-Model," Defence and Peace Economics, Taylor & Francis Journals, vol. 16(5), pages 391-401.
    • Handle: RePEc:taf:defpea:v:16:y:2005:i:5:p:391-401
    DOI: 10.1080/10242690500210914
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    References listed on IDEAS

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    1. Bhagwati, Jagdish N, 1982. "Directly Unproductive, Profit-seeking (DUP) Activities," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 988-1002, October.
    2. S. Murshed, 1992. "Comparing quotas with VERs: A three-region, North-South-NICs macroeconomic analysis," Open Economies Review, Springer, vol. 3(3), pages 255-270, October.
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    Cited by:

    1. Syed Mansoob Murshed, 2009. "Threat Perceptions in Europe: Domestic Terrorism and International Crime," Economics of Security Working Paper Series 2, DIW Berlin, German Institute for Economic Research.

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