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NCJ Number: 155854 Add to Shopping cart Find in a Library
Title: Quantity Discounts and Quality Premia for Illicit Drugs
Author(s): J P Caulkins; R Padman
Date Published: 1991
Page Count: 24
Sponsoring Agency: Carnegie Mellon University
Pittsburgh, PA 15213
National Institute of Justice/
Rockville, MD 20849
NCJRS Photocopy Services
Rockville, MD 20849-6000
Publication Number: 91-42
Sale Source: National Institute of Justice/
NCJRS paper reproduction
Box 6000, Dept F
Rockville, MD 20849
United States of America

Carnegie Mellon University
School of Urban and Public Affairs
Pittsburgh, PA 15213
United States of America

NCJRS Photocopy Services
Box 6000
Rockville, MD 20849-6000
United States of America
Type: Research (Applied/Empirical)
Language: English
Country: United States of America
Annotation: This paper explores quantity discounts and quality (purity) premia in illicit drug prices by examining several models of how drug prices depend on transaction size.
Abstract: The simple relation implied by a tree model of the domestic distribution network fits data provided by the Western States Information Network for 1984-1991 quite well for various illicit drugs. Quality premia, however, are less well-explained. Price is not a function of pure quantity alone; customers pay more for 2 grams at a given purity than they do for 1 gram at double that purity. Nevertheless, some purity premia are observed for white heroin, brown heroin, and powder cocaine, although not for methamphetamines, crack, or heroin tar. Estimated coefficients reflect known phenomena such as collapses in the price of cocaine and black tar heroin, intuitively reasonable but not documented effects such as discounts for brown heroin near the Mexican border, and some unexpected results such as an apparent difference in the distribution of sinsemilla and other cannabis products. The authors suggest that similar equations reasonably describe prices of various illicit drugs in a larger region at a variety of market levels ranging from the street up to the wholesale level. This means that drug policy researchers may need to use analytical models of price as a function of transaction size in their analysis. 13 references and 6 tables
Main Term(s): Drug research
Index Term(s): Cocaine; Cost analysis; Crack; Drug manufacturing; Drug regulation; Economic analysis of crime; Economic crime models; Heroin; Marijuana; Mexico
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