Citation

Freeborn BA. J. Law Econ. 2009; 52(1): 19-40.

Copyright

(Copyright © 2009, University of Chicago Press)

DOI

10.1086/592719

PMID

unavailable

Abstract

Contrary to one goal of drug law enforcement, cocaine prices decreased between the years 1986 and 2000. This paper discusses how arrest avoidance behavior may affect cocaine consumer and dealer response to law enforcement. Dealers avoid arrest by making quick and easy sales; thus, pure‐gram price is negatively related to dealer enforcement. Consumers avoid arrest by accepting high prices rather than searching for lower prices. Thus, pure‐gram price is positively related to consumer enforcement. Because the implications from arrest avoidance conflict with traditional models of how enforcement should affect prices, I also empirically examine the relationship. Using purchase‐level data from the Drug Enforcement Administration and legal penalty data, I find a negative, significant relationship between dealer enforcement and pure‐gram price and a positive, significant relationship between consumer enforcement and pure‐gram price. Both are consistent with the intuition of arrest avoidance.