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What Price Data Tell Us About Drug Markets
Any type of content formally published in an academic journal, usually following a peer-review process.
posted on 01.01.1998by Jonathan Caulkins, Peter Reuter
This paper reviews empirical evidence on drug prices and discusses implications for understanding
of drug markets and for policy. The most striking characteristics of drug prices are their high
levels and extreme variability over time and space. High prices deter consumption but have
ambiguous effects on drug-related crime. The consequences of the variability are largely
unexplored and are difficult to determine. Conclusions are mixed with respect to the ability of
policy to influence prices. Prohibition plus some degree of enforcement can drive prices far above
what they would be if drugs were legal. In certain circumstances, interventions can create transient
spikes in price or alter the source of drugs by driving up prices from one source relative to another.
However, increasing enforcement over and above an already strongly enforced prohibition appears
to have only limited ability to drive prices up further.