TY  - JOUR
AU  - Pacula,Rosalie Liccardo
AU  - Kilmer,Beau
AU  - Grossman,Michael
AU  - Chaloupka,Frank J.
TI  - Risks and Prices: The Role of User Sanctions in Marijuana Markets
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13415
PY  - 2007
Y2  - September 2007
UR  - http://www.nber.org/papers/w13415
L1  - http://www.nber.org/papers/w13415.pdf
N1  - Author contact info:
Rosalie Liccardo Pacula
RAND Corporation
1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407-2138
Tel: 310/393-0411 ext. 6494
Fax: 858/350-8798
E-Mail: pacula@rand.org

Beau Kilmer
RAND
1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407-2138
E-Mail: kilmer@rand.org

Michael Grossman
Ph.D. Program in Economics
City University of New York Graduate Center
365 Fifth Avenue, 5th Floor
New York, NY  10016-4309
Tel: 212/817-7959
Fax: 212/817-1597
E-Mail: mgrossman@gc.cuny.edu

Frank J. Chaloupka, IV
University of Illinois at Chicago
Department of Economics (m/c 144)
College of Liberal Arts and Sciences
601 S. Morgan Street, Room 713
Chicago, IL  60607-7121
Tel: 312/413-2287
Fax: 312/996-3344;630/801-8870
E-Mail: fjc@uic.edu
AB  - User sanctions influence the legal risk for participants in illegal drug markets. A change in user sanctions may change retail drug prices, depending on how it changes the legal risk to users, how it changes the legal risk to dealers, and the slope of the supply curve. Using a novel dataset with rich transaction-level information, this paper evaluates the impact of recent changes in user sanctions for marijuana on marijuana prices. The results suggest that lower legal risks for users are associated with higher marijuana prices in the short-run, which ceteris paribus, implies higher profits for drug dealers. Additionally, the findings have important implications for thinking about the slope of the supply curve and interpreting previous research on the effect of drug laws on demand for marijuana.
ER  -