How should Policy Respond to Disruptions in Markets for Illegal Drugs?

Abstract

This article raises the question of how drug policy should respond to take advantage of market disruptions. A simple mathematical model of the spread of drug use is adapted to a two-stage problem in which drug prices are abnormally low or high in the first stage, and the policy planner is allowed to adjust the level of drug control funding continuously over time. Optimal policies for this model are derived using the methods of optimal control theory. They suggest that whether it is better to increase or decrease drug control efforts in response to a market disruption can depend on the initial number of users and, hence, on the stage of the epidemic, as well as the length and intensity of the drought or glut. Although simple prescriptions are not possible, the potential for adaptive policies to improve outcomes is illustrated.