How Drug Enforcement Affects Drug Prices

Enforcement against drug selling remains the principal tool of drug control in the United States and many other countries. Though the risk of incarceration for a drug dealer has risen fivefold or more over the last 25 years in the United States, the prices of cocaine and heroin have fallen substantially. Different models of how enforcement affects drug supply may help explain the paradox. There are substantial periods in which drug markets are not in the stable equilibrium that has informed much of the empirical research. Enforcement is likely to be more effective in preventing the formation of a mass market than in suppressing such a market once it has formed. Once a mass market is established, there may be little return to intense enforcement. A modest level of enforcement may generate most of the benefits from prohibition.