ABSTRACT
Drug legalization is gaining ever-widening support in most Western societies. A liberalization of current drug laws will most probably lead to a fall in drug prices. The present article focuses on recent economic studies examining the effects of a fall in prices on quantities consumed and recruitment. Estimates of price elasticities indicate that a substantial increase in consumption by current drug users should be expected if prices decrease, whereas estimates of participation elasticities suggest an increase in the number of users. Tests of the so-called gateway theory (i.e., whether the use of a less harmful drug increases the risk of future use of more harmful drugs) offers less unambiguous results.
