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The Economics of Pot


Bill Easterly takes this map of pot prices….


and proposes this question to his students:

So students, please explain using the concepts of supply, demand, and transport costs (including in this case smuggling costs) the pattern of prices you see here.


2 Responses

  1. someone pointed out that there were some random [incorrect?] prices thrown in…also, does this take it into account the large variants between a big city in the midwest vs. a small podunk town 150 miles outside the city limits?

  2. Someone else also pointed to a map of median household incomes which loosely corresponds.

    This is probably true to a point…but also, personal preference (quality) is not necessarily related to income in this instance I would argue. Additionally, because it is a bit of a disjointed market, the price could be artificially heightened in higher income areas and it does not specifically mean the quality is actually better…

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