Drug Use and Abuse in America
The underground economy operates like all market economies. Prices mediate between consumers who want the product on the market and suppliers who ensure that consumers get what they want. Variations in price send signals to consumers and producers about the relative costs of maintaining the market for illicit drugs. Higher prices tell consumers that the relative costs of supplying illegal drugs in the black market will be high, while lower prices suggest that the costs will be low. The way the two sides of the economic equation work is essential for evaluating the prospective role of public policy.