Am I using economic concepts correctly in the following? Please correct and clarify for me if not.
In this scenario, we want to curb or decrease the use of drugs and the use of the services provided by prostitution. So, if you legalize either, and then in policy increase the prices for those goods or services, you can eliminate price-sensitive or elastic consumers, like teenagers. It does not solve the problem, but this is just an economic scenario, right? It will decrease documented use and users, but since these were black market operations, to begin with, there will always exist a black market to supply what the public markets cannot. Quality in these black markets will be poor, but prices will reflect this. Inelastic consumers, such as working adults, in the face of a price increase, will choose less expensive substitutes rather than abstain, and will even choose illegal avenues to attain before abstaining, or going without.
Another conundrum in the drug arena is the addictive vs non-addictive substances debate. Highly addictive substances like cocaine and heroin will experience less elasticity than substances such as nicotine or marijuana. Because it can be argued that addiction diminishes rational choice, increases in price that would normally cause users to refrain from use are not effective and thus do not end up lowering the quantity of drugs demanded, addiction counteracts theory and demand only decreases negligibly. Here, revenues would increase for the suppliers of such goods and services, while not even making a dent in the quantity of drugs demanded. Profits however may not increase as interdiction efforts also increase a supplier's production and distribution costs.
Am I using economic concepts correctly in the following? Please correct and clarify for me if not.
In this scenario, we want to curb or decrease the use of drugs and the use of the services provided by prostitution. So, if you legalize either, and then in policy increase the prices for those goods or services, you can eliminate price-sensitive or elastic consumers, like teenagers. It does not solve the problem, but this is just an economic scenario, right? It will decrease documented use and users, but since these were black market operations, to begin with, there will always exist a black market to supply what the public markets cannot. Quality in these black markets will be poor, but prices will reflect this. Inelastic consumers, such as working adults, in the face of a price increase, will choose less expensive substitutes rather than abstain, and will even choose illegal avenues to attain before abstaining, or going without.
Another conundrum in the drug arena is the addictive vs non-addictive substances debate. Highly addictive substances like cocaine and heroin will experience less elasticity than substances such as nicotine or marijuana. Because it can be argued that addiction diminishes rational choice, increases in price that would normally cause users to refrain from use are not effective and thus do not end up lowering the quantity of drugs demanded, addiction counteracts theory and demand only decreases negligibly. Here, revenues would increase for the suppliers of such goods and services, while not even making a dent in the quantity of drugs demanded. Profits however may not increase as interdiction efforts also increase a supplier's production and distribution costs.
