A persistent problem facing our society is the use of illegal drugs, such as heroin, cocaine, ecstasy, and crack. Drug use has several adverse effects. One is that drug dependence can ruin the lives of drug users and their families. Another is that drug addicts often turn to robbery and other violent crimes to obtain the money needed to support their habit. To discourage the use of illegal drugs, the U.S. government devotes billions of dollars each year to reduce the flow of drugs into the country. Let’s use the tools of supply and demand to examine this policy of drug interdiction.

Suppose the government increases the number of federal agents devoted to the war on drugs. What happens in the market for illegal drugs? As is usual, we answer this question in three steps. First, we consider whether the supply or demand curve shifts. Second, we consider the direction of the shift. Third, we see how the shift affects the equilibrium price and quantity.

Although the purpose of drug interdiction isto reduce drug use, its direct impact is on the sellers of drugs rather than the buyers. When the government stops some drugs from entering the country and arrests more smugglers, it raises the cost of selling drugs sud, therefore, reduces the quantity of drugs supplied at any given price. The demand for drugs the amount buyers want at any given price is not changed. Interdiction shifts the supply curve to the left from 51 to 52 and leaves the demand curve the same. The equilibrium price of drugs rises from PI to P2 and the equilibrium quantity falls from QI to Q2. The fall in the equilibrium quantity shows that drug interdiction does reduce drug use.

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