Inelastic Demand
There is a very intersting study, paraphrased in science daily, regarding the economics of illegal goods, especially drugs. The idea behind drug enforcement is to create a number of extra expenses for drug cartels and dealers, preventing them from delivering a cheap product and driving them out of business. With products that have elastic demand, increasing standards/levels of enforcement/etc. are extremely sucessful. Unfortuately, according to the study, demand for drugs doesn't seem to change. Even though the market due to enforcement raises prices, the same number of people still buy it anyway. The end result is that the cartels make the same profits, sometimes more, and the poor people addicted to drugs get even poorer.
I would like to see a version of this economic model applied to international politics. For instance, what effect does stricter enforcement of global policies (through military action, for instance) do to areas of the world that have an inelastic demand for specific illegal countercultures (such as terrorist organizations)? Also, is U.S. oil consumption basically inelastic? If this is the case, does this mean that price gouging is an inevitable fact? Does it mean we must have aggressive oil aquisition policies that supercede more elastic moral issues?
posted by Chris W. @ 9:48 AM
