How Does the Cocaine “industry” Work?
Question by brex25: How does the cocaine “industry” work?
First, how does cocaine addiction relate economically? Is coke itself addictive, be it physically or mentally, or are there additives laced in the drug that make it addictive, like in cigarettes, in order to increase profit? And if so, at which level of cocaine distribution is this done, and who profits? Is cocaine a market-driven product like any legitimate product or does it follow different “rules” i.e., is its distribution based on the supply and demand model or because of its underworldly nature (and addictive elements), is cocaine heavily “demanded” with a never-enough “supply.” Is the “supply” regulated by cocaine industry leaders similar to the way OPEC regulates oil output to maintain profits?
This is strangely interesting to me! (And no, I am not a raving coke-head)
Best answer:
Answer by smittybo20
It is all supply and demand. Just like any other product.
Answer by dmaniscool21
Alright – Here is the economic theory behind “black market goods” (drugs, hot merchandise, ect)
Basically – Sellers are willing to sell less of a good at any given point on the supply curve, due to the expected costs associated with selling the illicit good (for example fines, jail time, ect). Likewise, buyers will have a lower demand at any given price along the demand curve. The specific price point where the market price comes into equilibrium depends on who is more likely to be punished — the buyer or seller.
In the end, it turns out the the price of black market goods is the same as that of what it would be if it were legal — only there will be a lower quantity sold — which essentially means economically speaking, the market would be better off making these goods legal.
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