how can elasticity help explain why drug interdiction could reduce the supply of drugs, yet possibly increase drug-related crime?

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Bunny GreenfelderLv2

14 Aug 2019

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An anti-drug policy that reduces the supply of heroin might

1. increase street crime because the addict's demand for heroin is highly inelastic.

2. reduce street Crime because the addict's demand for heroin is highly elastic.

3. reduce street crime because the addict's demand for heroin is highly inelastic.

4. increase street crime because the addict's demand for heroin is highly elastic.

ceriseyellowjacket472

There is ongoing policy debate concerns whether to legalize the use of drugs, such as marijuana. Some researchers estimate that legalizing marijuana would cause its price to fall by as much as 95 percent. Proponents of legalization argue that legalizing drug would lower crime rates by eliminating the main reason for the murderous gang was that plague many big cities and by reducing the incentive for drug addicts to commit robberies and burglaries. Opponents of legalization argue that lower drug prices would lead more people to use drugs.

a. Suppose the price elasticity of demand for marijuana is â2. If legalization causes the price of marijuana to fall by 95 percent, what will be the percentage increase in the quantity of marijuana demanded?

b. If the price elasticity is â0.02, what will be the percentage increase in the quantity demanded?

c. Discuss how the size of the price elasticity of demand for marijuana is relevant to the debate over its legalization.

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.