The International journal on drug policy
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Int. J. Drug Policy · Nov 2009
The cocaine and heroin markets in the era of globalisation and drug reduction policies.
Despite the large volume of public effort devoted to restrain drug supply and the growing attention given to drug demand reduction policies, the use of cocaine and heroin remains steady. Furthermore, retail drug prices have fallen significantly in Europe and the US. This puzzling evidence leads us to develop a model aiming at systematically analysing illicit drug markets. ⋯ Law enforcement measures increase the risk premia received by the lower and higher level traffickers. Consequently, trafficking intermediation margins tend to increase. However, globalisation has the opposite effect. It lowers intermediation margins and, then, pushes retail prices down, thereby stimulating consumption. In doing so, globalisation offsets the effects of supply containment policies. Finally, we discuss how the effectiveness of supply containment policies can be enhanced by combining them with demand reduction policies.