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Question: Is there a quantitative or some kind of correlation between the number of drug dealers in a certain region and the price of pharmaceutical drugs?

This is for a case I'm working on, but I can't seem to find a direct correlation between the price of prescription drugs and drug dealers.

Right off the bat, it seems simple right? Lower prices force drug dealers out as consumers turn towards the brand name drugs which effectively lowers the amount of drug dealers in an area. However, I can't seem to find, anywhere, that says something along those lines.

Any help?

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  • $\begingroup$ I have to admit that I seldom buy any kind of drugs, prescription or non-prescription, but it seems to me that most of these are poor substitutes. Could you perhaps explain exactly what kind of drugs you are thinking of? $\endgroup$ – Giskard Dec 2 '18 at 7:16
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Direct correlation seems unlikely. You would probably have to control for population or even better, population density. Leaving prices unchanged a city with ten times the population can support ten times as many drug dealers. Differences in average income levels would present a similar problem.

Finding reliable data, such as number of drug dealers and a good measure of price levels will be a challenge as well.

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it seems simple right? Lower prices force drug dealers out as consumers turn towards the brand name drugs which effectively lowers the amount of drug dealers in an area.

No, it is definitely not simple. Perhaps it is not even practical. You are talking about two different, largely disjoint markets.

In one market, the consumer base consists of patients undergoing medical treatment. In the other market, the set of consumers consists of junkies. Each set's approach toward narcotics is different than the other's. Although there can be some intersection (for instance, some prescription drugs create dependence and lead to illegal substitutes, whereas a rehab might be prescribed certain drugs to overcome his prior addiction), I doubt it would be representative of the "composite" consumer base.

Each market might present wildly different elasticities, thereby precluding the possibility of a serious, reliable analysis of one "consolidated" market.

Even if pharmaceutical companies increase drugs supply, that does not mean (or ought not imply) that it will be matched by an increase in the number of prescriptions.

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