data needed to apply the methods of labor economics were available. The committee recommends survey research on the labor supply of illegal drug dealers. The Current Population Survey and the National Longitudinal Surveys, among others, routinely gather data on the supply of legitimate labor. Surveys using questions similar to those in the Current Population Survey and National Longitudinal Surveys could be carried out in drug-dealing neighborhoods of a few large cities. The surveys could be carried out over a period of years, and it is likely that many of the same individuals could be reinterviewed periodically, thereby providing longitudinal data. Methods such as those developed by the National Household Survey of Drug Abuse could be used to maintain confidentiality of responses and to ensure that respondents are not put in legal jeopardy by their answers to questions.

Estimating Demand Models and Price Elasticities

In economic systems, the price at which goods are transacted and the quantity of goods consumed are determined by the interaction between suppliers and consumers. Our focus here has been primarily on factors influencing the supply of illegal drugs to the retail market. Systems research on economic markets, however, must ultimately link the behavior of suppliers and consumers. Policies aimed at reducing the supply of drugs work via the market equilibrium.

The state of knowledge of demand functions and price elasticities of demand for illegal drugs is discussed in detail in Chapter 2. As we explain there, the estimation of demand functions for illegal drugs presents severe conceptual and data-related problems that have not yet been solved. Existing estimates of demand functions and price elasticities should be treated as suggestive first steps that are not conclusive.


Two main objectives of law enforcement operations against retail drug markets are to reduce the number of drug dealers that operate in a city (or other geographical area) and to reduce the quantity of drugs that individual dealers sell. A third objective is to reduce the violence and community disruption that is associated with drug markets. Measures aimed at achieving the first two objectives are not necessarily consistent with achieving the third and vice-versa. For example, the committee has received anecdotal information indicating that in some large cities, police have negotiated agreements with drug dealers according to which the police agree to reduce their efforts to arrest dealers and the dealers agree

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