TY  - JOUR
AU  - Chang,Sheng-Wen
AU  - Coulson,N. Edward
AU  - Wang,Ping
TI  - Optimal Drug Policy in Low-Income Neighborhoods
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9248
PY  - 2002
Y2  - October 2002
UR  - http://www.nber.org/papers/w9248
L1  - http://www.nber.org/papers/w9248.pdf
N1  - Author contact info:
Sheng-Wen Chang
Department of Public Finance
National Chengchi University
No. 64, Sec. 2, Tz-nan Rd.
Taipei 116, Taiwan
Tel: 886-2-22349830
Fax: 886-2-29390074
E-Mail: sxc240@nccu.edu.tw

Ping Wang
Department of Economics
Washington University in St. Louis
Campus Box 1208
One Brookings Drive
St. Louis, MO 63130-4899
Tel: 314/935-5632
Fax: 314/935-4156
E-Mail: pingwang@wustl.edu
AB  - Part of the debate over the control of drug activity in cities is concerned with the effectiveness of implementing demand- versus supply-side drug policies. This paper is motivated by the relative lack of research providing formal economic underpinning for the implementation of either policy. We construct a simple model of drug activity, in which the drug price and the distribution of population in a community are determined according to a career choice rule and a predetermined drug demand. Three potential government objectives are considered. We find that both demand- and supply-side policies have theoretical support under different community conditions. While the demand-side policy discourages active drug sellers, the supply-side policy has an additional drug-dealing replacement effect on inducing potential entry of drug dealers. In low-income neighborhoods, demand-side policy is more effective if the drug problem is more sever or if the government objective is to deter dealer entry or to promote community's aggregate income rather than minimizing active drug selling.
ER  -