Evo, Pablo, Tony, Diego, and Sonny : General Equilibrium Analysis of the Market for Illegal Drugs

This paper presents a general equilibrium model for the production, trafficking, and consumption of illegal drugs which endogenously determines relative prices and quantities. The model is calibrated to characterize the market for cocaine and is used to analyze the effects of three types of policies: making the illegal activities riskier, increasing the penalties for conducting illegal activities, and legalizing previously illegal activities. Assessing the effects of these policies using the powerful tool of a general equilibrium model provides illuminating (and in cases surprising) results.

Bibliographic Details

Main Author:	Chumacero, Rómulo A.
Language:	English
Published:	World Bank, Washington, DC 2008-03
Subjects:	ANNUAL GROWTH, CD, COMPETITIVE EQUILIBRIUM, CONSUMER PRICE, CONSUMERS, CONSUMPTION GOOD, CRRA, DEPRECIATION, DEPRECIATION RATE, ECONOMETRIC MODELS, ECONOMIC PERSPECTIVES, ECONOMIC RESEARCH, ECONOMIC THEORY, EQUILIBRIUM, EQUILIBRIUM CONDITIONS, EXPENDITURE, FUNCTIONAL FORMS, GENERAL EQUILIBRIUM, GENERAL EQUILIBRIUM ANALYSIS, GENERAL EQUILIBRIUM MODEL, GENERAL EQUILIBRIUM MODELS, GOVERNMENT EXPENDITURES, GROWTH RATE, IMPERFECT COMPETITION, INCOME EFFECT, INTERNATIONAL BANK, MACROECONOMICS, MARGINAL COST, NEGATIVE SUPPLY SHOCK, OPTIMAL ALLOCATIONS, OPTIMIZATION, PERFECT COMPETITION, POLITICAL ECONOMY, PRICE INCREASES, PRIVATE CONSUMPTION, PRODUCTION FUNCTION, PRODUCTION FUNCTIONS, RELATIVE PRICE, RELATIVE PRICES, REPRESENTATIVE AGENT, RISK AVERSION, RISK FACTORS, SALE, SEIZURES, SIDE EFFECTS, STEADY STATE, SUBSTITUTE, SUPPLY RESPONSE, SUPPLY SHOCK, SUPPLY SIDE, TAX, TAX RATE, UNCERTAINTY, UTILITY FUNCTION, UTILITY FUNCTIONS,
Online Access:	http://documents.worldbank.org/curated/en/2008/03/9323848/evo-pablo-tony-diego-sonny-general-equilibrium-analysis-illegal-drugs-market https://hdl.handle.net/10986/6525
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