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 o pium market in the Dutch East Indies-nowadays Indonesia-for several de cades. This state monopoly was called the opiumregie. Using informatio n gathered during the opiumregie, this paper estimates price elasticit ies of opium consumption. It appears that short-term price elasticitie s of opium use are about -0.7. Long-term price elasticities are about -1.0.