Explaining the decline of heroin and cocaine price in the European countries: an empirical approach

• In Event: Players and Rules in Illicit Drug Markets

Abstract

Data on the illicit drug market, as any other illicit market, are poor compared to licit markets. Given the lack of data on quantity of drug consumed, numbers of dealers/users, etc. information on the price of drugs are a key in understanding how the illicit drug market works. They can be used to assess changes in the supply, demand, enforcement and to evaluate alternative drug policies.
The price of heroin and cocaine in Europe registered a sharp decline in the last 20 years. Between 1991 and 2011 heroin passed from €186 to €51.9 and cocaine from €143 to €61. Despite this remarkable drop, researches on how this phenomenon can be explained are still scant. This paper aims to fill this gap by empirically analyzing what can explain the drop of drug prices across the EU countries. Data on law enforcement, violence, drug consumption and socio-economic conditions from 1995 to 2007 for fifteen EU countries are collected to conduct a fixed effect panel data analysis. Results are discussed providing policy recommendations and indications for future research.

Author

• Luca Giommoni, Università Cattolica del Sacro Cuore of Milan