ABSTRACT
In economic terms, addiction is the combination of reinforcement and tolerance, both of which may leave the user unable to cease use and thus willing to pay higher prices. Cocaine and marijuana are illegal substances that are subject to legal sanctions that alcohol is not. Broadly, cocaine prices reflect scarcity. The price structure that prevails in cocaine trafficking has an important implication for counterdrug policies in general, and source country policies in particular. Making cocaine is a relatively simple process, particularly in comparison to other drugs, such as heroin. In reality, prices' impact on cocaine consumption is much more complicated than elasticity. If high prices deter nonusers from ever trying cocaine and novices from increasing use, then over time the size of the cocaine using population will get smaller. This is one reason the price increase must be sustained; fleeting price rises may not alter the initiation stream.
