Doyle, Chris, 1960- and Smith, Jennifer C. (1997) Crime and drugs: an economic approach. Working Paper. Coventry: University of Warwick, Department of Economics. (Warwick economic research papers.

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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.

Item Type:	Working or Discussion Paper (Working Paper)
Subjects:	H Social Sciences > HV Social pathology. Social and public welfare
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Crime -- Economic aspects, Drugs -- Law and legislation, Decriminalization, Drug legalization, Externalities (Economics)
Series Name:	Warwick economic research papers
Publisher:	University of Warwick, Department of Economics
Place of Publication:	Coventry
Date:	April 1997
Number:	No.477
Number of Pages:	32
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
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URI:	http://wrap.warwick.ac.uk/id/eprint/1663

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