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Domestic Geographic Variation in Illicit Drug Prices

NCJ Number
165915
Author(s)
J P Caulkins
Date Published
1995
Length
21 pages
Annotation
The author hypothesizes that illicit drug prices increase as one moves away from the source of drugs due to poor information flow and that illicit drug prices are negatively related to market size due to economies of scale.
Abstract
To test these hypotheses, data were obtained from a 1991 survey of law enforcement agencies. Respondents were asked for price data about actual drug purchases. Specific variables relating price to market size and distance from source were tested. With two exceptions, data supported the two hypotheses. Cocaine prices in communities surrounding Tier I cities (New York, Newark, Philadelphia, Baltimore, and the District of Columbia) were not significantly higher than prices within those cities. Cocaine prices in Tier II cities (Pittsburgh, Columbus, and Buffalo) were significantly lower than prices in surrounding communities. Marijuana prices were not related to market size. LSD prices were negatively related to community populations. An appendix provides data on the categorization of cities. 27 references and 7 tables

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