tion to shift to other geographical areas. Such shifting significantly decreases and may entirely vitiate the effect of crop suppression on the supply of cocaine. It is unknown whether deterrence measures can be developed that would diminish or prevent geographical shifting of production in response to suppression of coca cultivation in limited areas.

Issues of substitution, deterrence, and adaptation have arisen repeatedly in the committee’s deliberations on supply-reduction policy as well as in presentations made to the committee in public workshops. These issues arise as much in discussion of domestic law enforcement as in discussion of interdiction policy. The remainder of this chapter examines questions related to domestic enforcement, beginning with the structure of retail drug markets.


A retail drug market is the set of people, facilities, and procedures through which a drug such as cocaine is transferred from suppliers to users. Users and suppliers interact through retail markets. Much law enforcement activity is aimed at disrupting this interaction by increasing the price that users must pay, decreasing the quality (purity) of the drugs that are sold, making it more difficult for users and sellers to find each other, or increasing the risks of buying and selling drugs. Other actions to reduce drug use also operate, at least in part, through their effects on retail markets. For example, a successful treatment or prevention program is likely to reduce the demand for drugs and therefore the earnings of individuals who sell them. This in turn may reduce the number of drug sellers. A program that improves legitimate employment for youths may also reduce the number of individuals who sell drugs, thereby increasing the difficulty that users encounter in finding drugs for sale and perhaps increasing the price that users must pay.

There are many questions about retail drug markets whose answers, were they available, would be useful to policy makers. For example:

  1. What is the price elasticity of the demand for powder cocaine? For cocaine base (crack)? Other drugs? That is, by how much does the quantity consumed decrease (increase) in when the retail price increases (decreases)? If the price increases, to what extent is the reduction in consumption caused by cessation of use by casual users? By heavy users? To what extent is the reduction in consumption caused by decreased use but not cessation by casual users? By heavy users? To what extent does a price increase limit initiation of new users? To what extent does the demand for one drug depend on the price of other drugs? What are the dynamics of the response of demand to price changes?

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