Resumen de The need for dynamic models of drug markets1

P. Reuter

• Markets for cocaine and heroin are created out of epidemics and are best analysed in terms of dynamic models rather than comparative statics. The author presents the following three problems requiring dynamic models and sketches a potential approach to each one: (a) why prices have declined so persistently in the face of intensified enforcement; (b) informing the choice between buyer and seller targeting for enforcement; and (c) explaining the extremely high variability of retail prices in such markets. For the first two problems, critical issues are the modelling of the path of sources of earnings (such as other crime or legitimate activities) and the drug-selling labour supply as consumption becomes dominated by drug users with increasingly long criminal histories and fewer legitimate employment opportunities. For the third problem, models need to take into account both the difficulty of ascertaining quality at the time of retail purchase and the instability of use and sale opportunities within those markets.