The economics of illegal goods weighs extremely heavily in favour of legalization and taxation rather than banning and enforcing, as Gary Becker, Kevin Murphy, and Michael Grossman outline in The Economic Theory of Illegal Goods: The Case of Drugs (NBER Working Paper, 1994).
….If the government seeks to regulate the quantity of marijuana consumed, it should choose to do so with a pricing mechanism such as taxation (from which it can earn revenue) rather than a ban (which is costly to enforce). The result is otherwise the same.
Enough taxation can reduce legal marijuana consumption to current regulated levels, and spare us the war on drugs
09 Apr 2014 Leave a comment
in applied welfare economics, law and economics, public economics Tags: illegal goods, marijuana, prohibition
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