World Economics - Insight , Analysis and Data

World Economics - Insight , Analysis and Data
Prohibition and the Market for Illegal Drugs
Suren Basov , Mireille Jacobson & Jeffrey A. Miron
World Economics, December 2001

Over the past 25 years in the United States, enforcement of drug prohibition has expanded dramatically. Over the same period, however, the trends in drug production and consumption have been essentially flat, and the real, purityadjusted prices of both cocaine and heroin have more than halved. This combination of facts raises questions about the effectiveness of prohibition enforcement, and it constitutes a puzzle that is interesting to explain. In this paper the authors document these facts and explore possible explanations. They do not claim to provide a complete answer, but shed light on which explanations are likely to be important.
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