“Supply-Side” & “Demand-Side” Economics in the Drug Trade

War on Drugs, LDS, Mormon

Coca Leaf in Bolivia, Wikimedia Commons

“Just as a monopolist can dictate prices to its consumers, who have no one else to buy from, a monopsonist can dictate prices to its suppliers, who have no one else to sell to.”

 

Excellent article in WSJ on the non-effect of reducing supply of cocaine. The Drug Cartels are like Wal-Mart, they are a monopoly and basically control the pricing. The farmers who grow the coca seel the leaves to make 1 kilogram of cocaine for $400. That kilo retails for $150,000. Wal-Mart only wishes it had such a markup.

How Economists Would Wage the War on Drugs

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