Price and Purity of Illicit Drugs: A Case of Methamphetamine

Abstract

This paper tries to address the effectiveness of government intervention in illicit drug markets, specifically taking methamphetamine as a representative and widely abused drug. We have meticulously consulted the paper by Dobkin and Nicosia (2009) who found that government intervention in pre-cursor meth market temporarily jeopardized the meth supply and consequently reduced purity and increased price for a very short span of time. We went beyond this finding and tried to explore why government intervention or so called “war-on-drugs” may be ineffective through analyzing the relationship between meth price and purity. We have found that methamphetamine has a strong complementarity with other illicit drugs specially heroin and powdered cocaine. It works like a person switching frequently between tea and coffee in a day, instead of mixing tea with coffee. Therefore, we conclude that in order to ensure the effectiveness of government’s drug monitoring programs, the drug market needs to be controlled or monitored in whole instead of just trying to fix a part of the whole.