The Relationship between Marijuana Prices at Different Market Levels
نویسنده
چکیده
This paper uses annual data from 1980-1998 to test two models of the relationship between wholesale and retail marijuana prices. Results from regressions of retail prices on wholesale prices reject a multiplicative model, in which the difference in prices between levels is proportional to the wholesale price, in favor of an additive model, in which the price difference is a fixed amount. This finding reduces the attractiveness of policies aimed at increasing wholesale marijuana prices, since the retail price response to a wholesale price change is roughly equivalent to the amount, rather than the percentage, of the change at the wholesale level. (JEL D40, I18, K42)
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