Economic Policies to Reduce the Abuse of Illicit Drugs

  • John JoshuaEmail author


This chapter discusses the economics of the abuse of illicit drugs, including an analysis of the model of rational addiction. An analysis of the illicit drug market has to consider the effect of addiction on the use of illicit drugs, so that addiction, rational decisions, and utility maximization are discussed in detail. This chapter explains the concept of price elasticities and their effects on drug policies. Increases in prices of illicit drugs may deter potential drug users to enter the drug market, but there is a dispute how this may affect the abuse of drugs by addicts. Hence, the relationship between addiction and rational decision is explored. Addiction increases tolerance of the drug, and therefore, the level of consumption increases as the marginal utility declines.


Addiction Drug market Economics of drug abuse Model of rational addiction Price elasticities Rational decision Utility maximization 


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Authors and Affiliations

  1. 1.Deakin UniversityMelbourneAustralia

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