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Crime and Drugs: An Economic Approach

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  • Doyle, Chris
  • Smith, Jennifer C.

Abstract

We present a model which ties together rational drug consumption, taxation, crime and other drug-related externalities. Drug control policy is addressed using an optimal tax framework. Consumption, possession and production of a drug may be prohibited, legalized or decriminalized. In all regimes illicit production of a drug may take place and drug-related crime occurs. We show that illicit drug production, the price elasticity of demand for a drug, the addictive nature of a drug, the e¤ectiveness of drug enforcement strategies, and income distribution all in‡uence optimal (second best) policy. Prohibition is contrasted with decriminalization and legalization, and where legalization yields a higher welfare than prohibition we show that this can be associated with greater drug-related crime and more drug addiction. The model is discussed in the context of US National Drug Control Strategy.

Suggested Citation

  • Doyle, Chris & Smith, Jennifer C., 1997. "Crime and Drugs: An Economic Approach," Economic Research Papers 268746, University of Warwick - Department of Economics.
    • Handle: RePEc:ags:uwarer:268746
    DOI: 10.22004/ag.econ.268746
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    References listed on IDEAS

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    1. Lee, Li Way, 1993. "Would Harassing Drug Users Work?," Journal of Political Economy, University of Chicago Press, vol. 101(5), pages 939-959, October.
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    3. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54, National Bureau of Economic Research, Inc.
    4. 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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    6. Chaloupka, Frank, 1991. "Rational Addictive Behavior and Cigarette Smoking," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 722-742, August.
    7. Peter A. Diamond, 1973. "Consumption Externalities and Imperfect Corrective Pricing," Bell Journal of Economics, The RAND Corporation, vol. 4(2), pages 526-538, Autumn.
    8. John J. DiIulio, 1996. "Help Wanted: Economists, Crime and Public Policy," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 3-24, Winter.
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    Cited by:

    1. Ziggy MacDonald, 2004. "What Price Drug Use? The Contribution of Economics to an Evidence‐Based Drugs Policy," Journal of Economic Surveys, Wiley Blackwell, vol. 18(2), pages 113-152, April.
    2. Donici, Andreea Nicoleta/NA & Maha, Andreea/A, 2012. "The Impact of soft drug legalization on Romania," MPRA Paper 36191, University Library of Munich, Germany.

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