Illegal drug use and public policy

Michael Grossman, Frank J Chaloupka, Kyumin Shim
Health Affairs 2002, 21 (2): 134-45
The period from the 1980s to the present has witnessed a lively and unsettled debate concerning the legalization of marijuana, cocaine, heroin, and other illicit substances in the United States. Proponents of legalization argue that the demand for these harmful and potentially addictive substances is not responsive to price. Opponents argue that prices will fall tremendously in a regime characterized by legalization and that the option of legalization and taxation is not feasible. In this paper we summarize theoretical and empirical evidence suggesting that none of these propositions is correct.

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