In: Economics
The government of the city of Dayton, Ohio in the U.S.A. wants to fight crime related to illegal drug use. Users often turn to crime to finance their drug habit. The city government asks you as an economic consultant to compare two policy interventions. Interdiction, which is aimed at disrupting delivery of drugs, and education, which aims at informing users about the danger of illicit drug use. Assume that the total value of drug related crime equals the total expenditure on drugs. Which policy do you recommend to Dayton’s policymakers, if you assume that demand for illegal drugs is inelastic due to addiction? Justify your answer rigorously. Illustrate your answer graphically.
There are two policies that are available:
(i) Disrupting delivery of drugs
(ii) Educating consumers of drugs about the ill-effects of drug consumption
Here, assuming that the demand for illegal drugs is inelastic because of the addiction.
In view of the data given, I would recommend educating buyers about the evil impacts of consuming drugs. It is given that when consumers won't be able to finance their drugs prerequisites, then they indulge in wrongdoings. Thus, subsequent to breaking down this circumstance, educating purchasers is the best arrangement. Education will assist customers with understanding the risky impacts of drugs on the wellbeing and progressively in the wake of getting mindful, they will decrease the utilization. At the point when consumer will settle on their own, that they don't need drugs any longer, they won't indulge in wrongdoings. Since it is given that the demand for drugs is inelastic, in this way, educating customer and making them demand less drugs is the main solution for the issue.
While, if government disrupt the supply of drugs, individuals will lose control and may indulge in wrongdoings.
In the following figure, x-axis represents the quantity of drugs and y-axis represents the price of drugs. When the consumers become more educated about the evil impacts of drugs, then as a result the demand for drugs falls. This will lead to shift the demand curve of drugs leftwards from DD to DD'.