The state must compete

Optimal pricing of legal cannabis

Bibliographic Data

ID9782463
AuthorsJason Childs (0000-0002-4090-4333, corresponding author), Jason Stevens
Year2019
Volume62
Issue4
Pages656-673
Publication date2019-12-01
Open AccessYes
TypeARTICLE
VenueCanadian Public Administration (JOURNAL)
Journal identifiersISSN: 0008-4840 • E-ISSN: 1754-7121
PublisherWiley (PUBLISHER • GB)
DOI10.1111/capa.12352
OpenAlexW2989819969
LanguageEN
Citations received7
References cited4

We examine the socially optimal pricing strategy for the legal cannabis industry that faces significant competition from an illicit market. We explore the impact of different preferences for legal and illicit cannabis using a constant elasticity of substitution utility function. We find that under a range of policy objectives and other circumstances, the socially optimal pricing strategy is for the legal market price to be dramatically lower than the illicit market price. This contradicts the approach taken across Canada in the year since legalization. These findings suggest that governments should adopt policies to reduce the price of legal cannabis

Business · Cannabis · Competition (biology · Economics · Legalization · Microeconomics · Political science · Price elasticity of demand · Public economics · Agricultural risk and resilience · Cannabis and Cannabinoid Research · Law · Substance Abuse Treatment and Outcomes

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