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Title:Globalization and the price decline of illicit drugs PDF Logo
Authors:Storti, Cláudia Costa
De Grauwe, Paul
Issue Date:2007
Series/Report no.:CESifo working paper 1990
Abstract:Retail prices of major drugs like cocaine and heroin have declined dramatically during the last two decades. This price decline has tended to offset the effects of drug policies aimed at reducing drug use in major industrial countries. The main finding of this paper is that the decline in the retail prices of drugs is related to the strong decline in the intermediation margin (the difference between the retail and producer prices) in the drug business. We develop the hypothesis, and give some evidence, that globalization has been an important factor behind the decline of the intermediation margin. We conclude with some thoughts about the effects of globalization on the effectiveness of drug policies and argue that globalization may have increased the relative effectiveness of policies aiming at reducing the demand of drugs.
JEL:F10
K42
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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