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Supply‐Side Response To Declining Heroin Purity: Fentanyl Overdose Episode In New Jersey

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  • Katherine Hempstead
  • Emel O. Yildirim

Abstract

The inelastic price demand observations characteristic of illegal drug markets have led to the conclusion that the burden of a negative supply shock would be completely reflected to consumers. This paper argues that the increasing availability of prescription opioids may threaten heroin sellers' profit margin and force them to find alternative methods to compensate buyers in the event of a supply shock. We investigate the 2006 fentanyl overdose episode in New Jersey and argue that the introduction of non‐pharmaceutical fentanyl, its spatial distribution, and the timing of overdose deaths may have been related to trends in heroin purity. Using medical examiner data, as well as data from the Drug Enforcement Administration, Office of Diversion Control on retail sales of prescription opioids in a negative binomial specification, we show that month‐to‐month fluctuations in heroin purity have a significant effect on fentanyl‐related overdoses, particularly in those areas where prescription opioids are highly available. Copyright © 2013 John Wiley & Sons, Ltd.

Suggested Citation

  • Katherine Hempstead & Emel O. Yildirim, 2014. "Supply‐Side Response To Declining Heroin Purity: Fentanyl Overdose Episode In New Jersey," Health Economics, John Wiley & Sons, Ltd., vol. 23(6), pages 688-705, June.
    • Handle: RePEc:wly:hlthec:v:23:y:2014:i:6:p:688-705
    DOI: 10.1002/hec.2937
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    Cited by:

    1. Casey B. Mulligan, 2020. "Prices and Federal Policies in Opioid Markets," Working Papers 2020-10, Becker Friedman Institute for Research In Economics.
    2. Casey B. Mulligan, 2020. "Prices and Federal Policies in Opioid Markets," NBER Working Papers 26812, National Bureau of Economic Research, Inc.

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