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The equilibrium effects of aggressive drug enforcement: "Mark Kleiman makes an interesting point about the effect of aggressive drug enforcement (read it, really): In the long run, drug enforcement may, in fact, tend to decrease prices by creating a class of retail drug dealers with felony records who therefore can't find lawful employment. That group then bids down dealing wages. (Crack dealers, who were making $30/hr. in Washington D.C. in the late 1980s, were making less than the minimum wage in Chicago in the late 1990s.) Since retail dealers' wages are an important element of the cost structure of the illicit drug industry, falling retail wages translate into falling retail prices. This isn't the only thing that could cause prices to fall, but it's certainly an intriguing one. "