Developing Price Series for Cocaine

Developing Price Series for Cocaine

PI: Jonathan Caulkins

The distribution, use, and control of illicit drugs in the United States impose substantial costs on society. Efforts to formulate policies that mitigate these costs are stymied by inadequate knowledge of the fundamental character of drug use and drug markets. RAND sought to improve knowledge about drug markets by constructing and analyzing a time series for the price of cocaine using data from the Drug Enforcement Administration's System to Retrieve Information from Drug Evidence, a database that includes records of prices paid by undercover agents for individual purchases. The RAND model standardized data for transaction size and purity using the assumption that cocaine price is governed more by its expected purity than the actual purity of the product. Using this concept, the model constructed price series for the gram, ounce, and kilogram level in a variety of locations. Analysis of these series revealed that significant price differences exist between cities, even at the wholesale level; these differences do not necessarily dissipate over time; and the ratio of prices at different market levels has remained remarkably constant over time.