THE PRICE ELASTICITY OF HARD DRUGS - THE CASE OF OPIUM IN THE DUTCH-EAST-INDIES, 1923-1938

At the beginning of this century the Dutch government controlled the opium market in the Dutch East Indies-nowadays Indonesia-for several decades. This state monopoly was called the opiumregie. Using information gathered during the opiumregie, this paper estimates price elasticities of opium consumption. It appears that short-term price elasticities of opium use are about -0.7. Long-term price elasticities are about -1.0.