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Crime and Drugs : An Economic Approach

Author

Listed:
  • Doyle, Chris

    (London Business School)

  • Smith, Jennifer C

    (Department of Economics, University of Warwick)

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 effectiveness of drug enforcement strategies, and income distribution all influence 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," The Warwick Economics Research Paper Series (TWERPS) 477, University of Warwick, Department of Economics.
    • Handle: RePEc:wrk:warwec:477
    as

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    File URL: https://warwick.ac.uk/fac/soc/economics/research/workingpapers/2008/crimdrug.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Donici, Andreea Nicoleta/NA & Maha, Andreea/A, 2012. "The Impact of soft drug legalization on Romania," MPRA Paper 36191, University Library of Munich, Germany.
    2. 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.

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    More about this item

    Keywords

    Crime ; decriminalization ; drugs ; externalities ; legalization ; optimal tax ; prohibition;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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