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Drug abuse--of licit and illicit drugs alike--is a big medical and social problem and attracts a substantial amount of research attention. But the most attractive and most easily fund-able research [...]

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jmateco.2010.08.021 Byline: Jonathan P. Caulkins (a), Richard F. Hartl (b), Peter M. Kort (c)(d) Keywords: Capital accumulation; Delayed response; Time-to-build; Time-to-install/deliver; Optimal control Abstract: We study delays in capital accumulation models. Our contribution is threefold. First, we identify a class of models that can be transformed into standard optimal control models without delay. Second, in the single state versions of these models the state trajectory is monotonic in the optimal solution. This is noteworthy given the common belief that adding delays facilitates oscillatory behavior of capital, output and investment. Third, we identify an equivalence result between time-to-install/deliver problems and time-to-build problems. Author Affiliation: (a) Carnegie Mellon University, Qatar Campus, Heinz College's School of Public Policy & Management, School of Information Systems & Management, 5000 Forbes Ave, Pittsburgh, PA 15213, USA (b) University of Vienna, School of Business, Economics, and Statistics, Bruennerstrasse 72, A-1210 Vienna, Austria (c) Tilburg University, Department of Econometrics & Operations Research and CentER, P.O. Box 90153, NL-5000 LE Tilburg, The Netherlands (d) Department of Economics, University of Antwerp, Prinsstraat 13, 2000 Antwerp 1, Belgium Article History: Received 25 March 2010; Revised 8 July 2010; Accepted 30 August 2010 Article Note: (footnote) [star] The authors like to thank an associate editor, two anonymous reviewers, Mauro Bambi, Raouf Boucekkine, Gustav Feichtinger, and Omar Licandro for their helpful comments.

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.ejor.2009.03.015 Byline: Jonathan P. Caulkins (a)(b), Gustav Feichtinger (c), Gernot Tragler (c), Dagmar Wallner (c) Keywords: OR in societal problem analysis; Control; Health; Drug policy; Epidemics Abstract: A heated debate in drug policy concerns the relative merits of 'harm reduction' (e.g., reducing drug-related HIV/AIDS transmission) vs. 'use reduction' (controlling drug use per se). This paper models whether shifting emphasis between these goals over the course of a drug epidemic might reduce social costs relative to pursuing one or the other exclusively. Results suggest different answers for different drugs and/or countries. In particular, harm reduction may have always been effective for Australia's injection drug use problem, but for US cocaine it may not have been in the past even if it could be so today. In certain circumstances harm reduction may 'tip' an epidemic toward a high- rather than low-use equilibrium. The location in state space of regions where this occurs can be sensitive to parameter changes, suggesting caution may be in order when advocating harm reduction, unless there is confidence the epidemic has been modeled and parameterized accurately. Author Affiliation: (a) Carnegie Mellon University, H. John Heinz III School of Public Policy Management, 5000 Forbes Ave., Pittsburgh, PA 15213, USA (b) Carnegie Mellon University in Qatar, PO Box 24866, Doha, Qatar (c) Institute for Mathematical Methods in Economics, Vienna University of Technology, Argentinierstrasse 8/105-4, A-1040 Vienna, Austria Article History: Received 19 July 2007; Accepted 6 March 2009

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jpolmod.2007.04.003 Byline: Jonathan P. Caulkins, Haijing Hao Keywords: Drug policy; Source country control; Market disruption; Supply chain modelling Abstract: Drug producing regions often supply several geographically distinct drug consumption markets. Disruptions of opium cultivation in Afghanistan and cocaine production in Colombia show that consumption reductions can be much smaller in some final markets than are reductions in cultivation. This paper derives a model for predicting how production deficits will be 'allocated' across downstream markets in the form of reduced use. Plausible parameterization suggests that for cocaine, markets outside the US may serve as a sort of 'shock absorber', partially shielding US markets from sharp fluctuations in consumption. One implication is that multi-lateral efforts may be appropriate for source country control. Author Affiliation: Carnegie Mellon University, Qatar Campus and Heinz School of Public Policy, Qatar Article History: Received 1 October 2006; Revised 1 February 2007; Accepted 1 April 2007

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.ejor.2006.05.027 Byline: Jonathan P. Caulkins (a), Gustav Feichtinger (b), Gernot Tragler (b), Vladimir M. Veliov (b)(c) Keywords: Cost benefit analysis; Cycles of violence; Hopf bifurcation; Optimal control; OR in government Abstract: We introduce and analyze a simple model of cycles of violence in which oscillations are generated when surges in lethal violence shrink the pool of active violent offenders. Models with such endogenously induced variation may help explain why historically observed trends in violence are generally not well correlated with exogenous forcing functions, such as changes in the state of the economy. The analysis includes finding the optimal dynamic trajectory of incarceration and violence prevention interventions. Those trajectories yield some surprising results, including situations in which myopic decision makers will invest more in prevention than will far-sighted decision makers. Author Affiliation: (a) H. John Heinz III School of Public Policy and Management, Carnegie Mellon University, Pittsburgh, PA, USA (b) Institute for Mathematical Methods in Economics, Research Unit for Operations Research and Nonlinear Dynamical Systems, Vienna University of Technology, Argentinierstrasse 8/105-4, A-1040 Vienna, Austria (c) Institute of Mathematics and Informatics, Bulgarian Academy of Sciences, Sofia, Bulgaria Article History: Received 23 August 2004; Accepted 8 May 2006 Article Note: (footnote) [star] This research was partly supported by the Austrian Science Fund (FWF) under grant # P14060-G05. Support was provided also in part by a grant from the National Consortium on Violence Research (NCOVR), headquartered at the Heinz School of Public Policy and Management at Carnegie Mellon University. NCOVR is supported under grant # SBR 9513040 from the National Science Foundation in partnership with the US Department of Housing and Urban Development and the National Institute of Justice.

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jedc.2006.05.008 Byline: Jonathan P. Caulkins (a), Richard F. Hartl (b), Peter M. Kort (c)(d), Gustav Feichtinger (e) Abstract: This paper considers the problem of a fashion trend-setter confronting an imitator who can produce the same product at lower cost. A one-dimensional product space is considered, which is an abstraction of the key attribute of some consumer good. Three broad strategies can be optimal for the fashion-leader: (1) never innovate, which milk profits from the initially advantageous position but ultimately concede the market without a fight. (2) Innovate once but only once, which just temporarily defers conceding the market. (3) Cycle infinitely around product space, never letting the imitator catch up and capture the market. Sometimes the cycles start immediately; sometimes the innovator should wait for a time before beginning the cycles. The optimal solution exhibits strong state-dependency, with so-called Skiba curves separating regions in state space where various of these strategies are optimal. There are even instances of intersecting Skiba curves. In most cases, analytical expressions can be stated that characterize these Skiba curves. Author Affiliation: (a) Carnegie Mellon University, H. John Heinz III School of Public Policy & Management, Pittsburgh,PA, USA (b) Department of Business Studies, University of Vienna, Vienna, Austria (c) Department of Econometrics and Operations Research & CentER, Tilburg University, P.O. Box 90153, 5000 LE Tilburg, The Netherlands (d) Department of Economics, University of Antwerp, Antwerp, Belgium (e) Department of Operations Research and Nonlinear Dynamical Systems, Institute for Mathematical Methods in Economics, Vienna University of Technology, Vienna, Austria Article History: Received 20 July 2005; Accepted 23 May 2006

The United States will soon surpass the half-million mark for drug prisoners, which is more than 10 times as many as in 1980. It is an extraordinary number, more than […]

We present a model of fixing or patching a software problem after the product has been released in the market. Specifically, we model a software firm's trade-off in releasing a buggy product early and investments in fixing it later. Just as the marginal cost of producing software can be effectively zero, so can the marginal cost of repairing multiple copies of defective software by issuing patches. We show that due to the fixed cost nature of investments in patching, a software vendor has incentives to release a buggier product early and patch it later in a larger market. Thus, a software monopolist releases a product with fewer bugs but later than what is socially optimal. We contrast this result with physical good markets where market size does not play any role in quality provision. We also show that for comparable costs, a software monopolist releases the product with more bugs but invests more in post-patching support later than the physical good monopolist. Key words: patching; software quality; time of entry; fixed costs; software bugs, 1. Introduction Software has become an intrinsic part of our lives: In 2002, the U.S. software market was worth almost $180 billion. As software becomes ingrained in daily business activities, [...]

Generally more is known about drug use and demand than about markets and supply, in large part because population survey data are available while market data are not. Although the household population represents a relatively small proportion of users of hard drugs, it represents a large proportion of the population using marijuana and participating in marijuana markets. This paper provides a description of marijuana market and acquisition patterns as reported by participants in the 2001 National Household Survey on Drug Abuse. We find that most respondents obtain marijuana indoors (87%), from a friend or relative (89%), and for free (58%). Retail marijuana distribution appears to be embedded in social networks rather than being dominated by 'professional' sellers. Despite these contrasts with stereotypical street markets for cocaine and heroin, there are also similarities, such as evidence of quantity discounts and a minority of users accounting for the majority of purchases. We estimate that there are on the order of 400 million retail marijuana purchases in the U.S. each year and that the average purchase size is small, about six or seven joints.

EARLIER THIS YEAR, AFRICA HELD ITS FIRST CONTINENT-WIDE CONFERENCE ON O.R. PRACTICE (ORPA-1) with partial funding support from INFORMS as well as EURO, IFORS, KPMG and other sponsors. ORPA-1 crowns […]

A dynamic optimization model of controlled migration with a Skiba point is presented for a major challenge of United States housing policy.

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jebo.2005.04.008 Byline: Jonathan P. Caulkins (a), Gustav Feichtinger (b), Michael Johnson (a), Gernot Tragler (b), Yuri Yegorov (c) Keywords: Optimal control; Multiple equilibria; Skiba point; Negative externality; Housing policy; Segregation Abstract: This paper presents a dynamic optimization model of a central challenge of US housing policy: deconcentrating poverty via housing mobility programs without inducing middle-class flight. We explore two versions both with and without the possibility that poor families assimilate into the middle class. Both demonstrate multiple equilibria with a Skiba point separating initial conditions for which the optimal strategy leads to substantial flight from those leading to a stronger middle-class population. We also find an interesting mathematical phenomenon of a 'lens' focusing the trajectories in a sense that allows for the coexistence of three saddles and an unstable equilibrium. Author Affiliation: (a) Carnegie-Mellon University, Heinz School of Public Policy and Management, 5000 Forbes Ave., Pittsburgh, PA 15213, USA (b) Vienna University of Technology, Institute for Mathematical Methods in Economics, OR and Systems Theory, Argentinstrasse 8, Vienna, Austria (c) Institute for Advanced Studies, Stumpergasse 56, Vienna, Austria

Drug markets have been targeted for increasingly tough enforcement, yet retail prices for cocaine and heroin have fallen by 70-80%. No research has explained adequately why prices have fallen. This paper explores the possibility that part of the explanation may lie in the failure of drug dealers to respond to risks the way the simplest rational actor models might predict.

Interviews with low-level drug dealers in New York City reveal that the monetary costs of distributing drugs are modest. Hence, the proportion of sales revenue retained by these sellers is a meaningful indicator of their earnings. There are four distinct types of sellers, with systematic differences across types in the proportion of sales revenue retained. Entrepreneurs who own the drugs they sell retain the largest share (about 50 percent). Independent consignment sellers retain less (about 25 percent). Consignment sellers who operate within fixed selling locations or 'spots' retain still less (10 percent), and the sellers who were paid hourly to sell from spots retained the smallest proportion (3 percent). These differences might explain variation in reports of sellers' earnings and may have significant implications for the relative ability of enforcement against spots and enforcement against sellers operating outside of spots to drive up drug prices and suppress drug use.

No relationship was observed between high-level domestic enforcement and increased retail prices of cocaine and heroin. Utilization of data from the Drug Enforcement Administration revealed a no Granger-casual relationship between changes in enforcement and changes in cocaine and heroin prices. However, a negative Granger causal relationship was observed when enforcement is measured in terms of numbers of seizures.

The outcome on whether the traditional practice of bundling advertisements with content will continue or become less common on the Internet is dependent on the response of customers to bundling and to other advertising schemes. The connection between advertising and content provision on the Internet may be influenced by the medium's unique features, which affect the options of advertisers, the behavior of customers, and their dependence on the distinctive technological features of the Internet.

This paper reviews empirical evidence on drug prices and discusses implications for understanding of drug markets and for policy. The most striking characteristics of drug prices are their high levels and extreme variability over time and space. High prices deter consumption but have ambiguous effects on drug-related crime. The consequences of the variability are largely unexplored and are difficult to determine. Conclusions are mixed with respect to the ability of policy to influence prices. Prohibition plus some degree of enforcement can drive prices far above what they would be if drugs were legal. In certain circumstances, additional severity of enforcement can create transient spikes in price or alter the source of drugs by driving up prices from one source relative to another. However, increasing enforcement over and above an already strongly enforced prohibition appears to have only limited ability to drive prices up further.

An analysis of proposals to promote difficult-to-reuse (DTR) syringes as a means of controling HIV spread is evaluated and results show that increasing consumption of both types will lead to a reduction in potentially infectious injections. The study also shows that the reduction will always be greater if regular syringes are added and that increasing the number of DTR syringes will lead to an increase in the number of potentially infectious injections.

Reduction of efforts associated with local drug market crackdowns is achieved through application of utmost possible effort from the earliest possible time. Effort exerted in crackdowns must also be sustainable in order to ensure lasting success. An optimum and sustainable effort prevents the return of illegal drug trading through total eradication of street markets.

An economic model examining a drug dealer's decision about how many customers to supply is developed to guide drug policy making. It formalizes the trade off between the competing incentives for dealers to sell to a larger or a smaller number of customers. On the one hand, selling to more, lower-level customers increases the profits of drug dealers. On the other hand, selling to fewer customers decreases costs and the risk of being caught by law enforcement officers. The model expresses the solution to the choice between these options in terms of a quantity discount parameter, the branching factor and the purchase price-selling cost ratio for the dealer. It suggests the potential impact of enforcement on retail price and consumption.

An evaluation of policy effects on air pollution control techniques by electric utilities reveals that Public Utility Commission regulations can affect Clean Air Act implementation outcomes. The study reveals that incentives combined with 'cost-plus' compliance can increase social costs of compliance significantly. However, the effects do not undermine the principal goal of air quality management policies.

This paper presents an analytical approach for scheduling crackdowns on street-corner drug markets. The crackdown scheduling problem is shown to be NP-complete. We then provide efficient optimal algorithms for several special cases and approximation algorithms for the general case. These results show that the optimal strategy is to give priority to markets that take longer to bring down and which require low levels of post-crackdown maintenance. The results are then extended to incorporate dealer displacement between drug markets. Keywords: Public policy; Modelling; Scheduling theory; Approximation, The optimal method for scheduling crackdowns on illegal drug markets is to prioritize those street-corner drug markets which would take longer to break up and which requires minimal enforcement to maintain the gains achieved by the crackdown. An analytical approach for scheduling crackdowns on these illicit drug markets is introduced. This technique also considers the practice of drug dealers to relocate to another market after a crackdown.

A Markov model is used to demonstrate the flow from light to heavy use of cocaine. The model estimates how drug epidemics have gone from light use to heavy use. The use of cocaine must be counteracted by reducing initiation to the levels of the late 1980s. Prevention programs must be supported by programs which make heavy users to quit to be able to significantly solve cocaine-related problems.

This paper discusses what the goals of national drug policy have been and suggests an alternative set of goals. The past emphasis on use reduction is found wanting. Total harm related to drugs can be viewed as the product of use and harm per use. Thus, reducing use usually serves to reduce harm. However, in some cases, use reduction programs may increase harm per use so much that they increase overall harm even as they succeed in reducing use. Hence, use reduction goals can be usefully augmented with the explicit objective of reducing the total harm created by the production, distribution, consumption, and control of drugs. Numerous programmatic recommendations flow from this approach. (Am J Public Health. 1995; 85:1059-1063), U.S. federal drug control goals should stress harm reduction in addition to use reduction. This would mean allocating resources to address the hard core addict rather than the occasional user. Enforcement efforts would be focused on drugs that do more harm rather than treating all illicit drugs alike. Enforcement would also concentrate on more violent drug distribution organizations, for example, heroin as opposed to marijuana. Programs would stress treatment rather than prison. Sentencing for drug-related offenses would become more fair. Drug use abatement would address alcohol and tobacco equally with illicit drugs since alcohol and tobacco do the greatest harm. Preventative education would be stressed. The Clinton administration's revised National Drug Control Strategy has shifted to emphasizing harm, but there are too many goals and objectives to form practical guidelines for policy nor has the list been prioritized.

The geographic variation of the prices of illicit drugs in the US is investigated. It is hypothesized that prohibited drugs become more expensive as one moves farther away from the source of these drugs as a result of weak information flows and major lateral transaction costs. It is also conjectured that the prices of unlawful drugs are negatively related to market size because of economies of scale. To test these assumptions, a survey of law enforcement agencies is administered by the Middle Atlantic-Great Lakes Organized Crime Law Enforcement Network in 1991. Participants are required to indicate three actual drug purchases made by their offices, including the quantity and type of drug. Results generally support the two hypotheses.

This article explores quantity discounts and quality (purity) premia in the prices of illicit drugs. It examines several models of how drug prices might depend on transaction size. A simple relation implied by a tree model of the domestic distribution network fits data provided by the Western States Information Network for 1984-1991 quite well for various illicit drugs. Quality premia are less well explained. It is observed that price is not a function of pure quantity alone; customers pay more for 2 grams at a given purity than they do for 1 gram at double that purity. Nevertheless, some purity premia are observed for white heroin, brown heroin, and powder cocaine, although not for methamphetamines, crack, or heroin tar. The estimated coefficients reflect known phenomena such as the collapses in the prices of cocaine and black tar heroin; intuitively reasonable but undocumented phenomena, such as discounts for brown heroin near the Mexican border; and some unexpected results, such as an apparent difference between the distribution of sinsemilla and that of other cannabis products. KEY WORDS: Price; Purity; Transaction size., Drug use, trafficking, and enforcement impose high costs on American society. Effective policy response has been hamstrung by numerous factors, including the unavailability of adequate measures of the problem. Developing [...]

The effectiveness of 'zero tolerance' policies on illicit drugs in reducing consumption of such drugs is examined. These policies involve sanctions for the possession of even small amounts of illegal drugs, policies which may result in more arrests, but not necessarily less consumption. Such policies may instead increase drug usage because in this legal set-up, punishment does not increase propotionately to the degree of usage. A mathematical model is used to show this result by describing illicit drug users' purchasing beahvior as a function of anticipated punishment. The model is also used to evaluate several punishment policies. For an individual user, the consumption minimizing policy involves zero punishment for consumption levels below a certain lower bound, an option which is politically infeasible. Applied in the US context, the results indicate that punishment is unaffected by quantity of usage.

Prevalence estimations of drug-related phenomena, including numbers of users, extent of consequences, and levels of consumption and expenditures, can provide information useful in assessing the scope of the problem, identifying patterns and trends in consumption, evaluating the effectiveness of intervention programs, and allocating resources. The authors summarize the policy needs for, the current status of, and recent developments in prevalence estimation, as described in the preceding articles. Implications raised in the collective work and specific recommendations to improve prevalence estimation in the service of policy are discussed.

The supply of heroin in the United States appears to have grown substantially in recent years, although it is not clear what impact this has had on consumption. Conventional indicators have shown only modest increases, but for a variety of reasons one would not expect increases even if we are in the early years of a new heroin use epidemic. It is even less clear what, if anything, should be done. Drug control resources are finite. Making heroin a new policy focus may impose substantial opportunity costs as resources are diverted from other worthy programs. On the other hand, the history of cocaine in the late 1970s and early 1980s demonstrates that 'wait and see' can be an extremely expensive option. A prudent course may be to implement relatively low-cost interventions that one would not regret undertaking even if a new epidemic never materialized and to enhance monitoring. If these enhanced monitoring programs gave strong signs of increasing use, particularly by new users, bolder interventions might be warranted.

Objectives. In this report, the author illustrates the historic relation between retail drug prices and emergency department mentions for cocaine and heroin. Methods. Price series based on the Drug Enforcement Administration's System to Retrieve Information From Drug Evidence database were correlated with data on emergency department mentions from the Drug Abuse Warning Network for cocaine (1978-1996) and heroin (1981-1996). Results. A simple model in which emergency department mentions are driven by only prices explains more than 95% of the variation in emergency department mentions. Conclusions. Fluctuations in prices are an important determinant of adverse health outcomes associated with drugs. (Am J Public Health. 2001;91:1446-1448)

Drug use and control Forces of Habit: Drugs and the Making of the Modern World, by David T. Courtwright. Cambridge, Mass.: Harvard University Press, 2001, 277 pp. Forces of Habit […]