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Question: Suppose the demand for fentanyl is perfectly inelastic, and that the users of fentanyl steal from others to acquire the money to pay for it. In an effort to crack down on fentanyl use, the government imposes harsher penalties on suppliers of fentanyl, reducing its supply. How will this policy affect the amount of stealing by fentanyl users?
READER COMMENTS
John Hall
Jul 29 2025 at 3:51pm
Reduced supplies will result in higher prices of fentanyl with a fixed quantity (due to perfectly inelastic demand). Assuming that the only means for users of fentanyl to acquire the money for it is by stealing (per the question), then they would need to steal more than before due to the higher prices.
David Seltzer
Jul 29 2025 at 7:33pm
John, I agree. Perfectly inelastic demand, as illustrated by a vertical line parallel to the Y axis, is that the quantity demanded is the same at any price. For example, a unique work of art. A Picasso, because there will never be more than one original version of it. It would be difficult for art dealers to steal from each other as the supply of extremely rare art is well known. Fentanyl can be produced and replicated unlike a single Monet or Picasso. There is more of incentive to steal by drug addicts. I suspect it’s very difficult to steal $95 million for a Picasso that sold at a Sotheby’s auction in 2006.
Alan Goldhammer
Jul 29 2025 at 4:47pm
Weird that this question comes up right now when there is a Serial Productions podcast on a nurse at Yale Med School who was stealing fentanyl from the IVF group that was harvesting eggs from women. Those undergoing the procedure were told ahead of time that it would be painless and any pain could be easily managed. Unfortunately, they were given saline (the nurse refilled the bottles with saline after extracting the fentanyl).
To answer the question, I rely on “Breaking Bad” economics! While fentanyl syntesis is more complicated than making meth, any competent organic chemist willing to take the risk can make the drug. Since markets are efficient, someone will come in and supply the demand.
steve
Jul 30 2025 at 8:26am
But the question presupposes that supply has been restricted. So the answer to the question is crime increases. The answer in real life is that despite decades of the War on drugs supply, like nature, always finds a way.
Steve
Grand Rapids Mike
Jul 29 2025 at 8:19pm
The implication of this scenario, as given, is just give fentanyl away, thereby reducing crime. Since fentanyl is highly addictive and deadly, the give away approach eventually reduces demand for fentanyl and crime as users die. Or is the optimal solution to provide treatment up to the point where the marginal cost of treatment equals the marginal cost to society of theft.
john hare
Jul 30 2025 at 4:37am
I would think more in terms of let the market decide rather than the legal system. Similar results to your scenario except provides some tax base and not another government “freebie”.
Peter
Jul 30 2025 at 5:32am
Given your presumptions, I’d agree and you’d even realize significant public spending savings with reduced criminal fabrication system costs which would vasty outweigh the cost of providing the fentanyl itself . You would also incur a significant private sector savings as well with a reduction in security needs. Win win win all around with the only people that lose being public sector unions and pearl clutchers. That said, it’s still all within the context of the stated assumptions for this “problem”.
In real life Fentanyl demand is in fact extremely elastic and substitution affects are high. Likewise it’s both low in addiction and generally safe comparatively to many of its direct competitors. The users would just switch drugs because they generally are already maximizing their potential income earning abilities, i.e. they are already working twelve to sixteen hours a day seven days a week hence would change to something cheaper like methamphetamine or even, God forbid, Isopropylbenzylamine if desperate because prices go to high. In the real world it’s the opposite as in lose lose lose win win respectively.
Robert EV
Jul 30 2025 at 12:04pm
Property and ransom crimes increase up to a point. This point is when users realize that no amount of money will get them a product not available in their area. At that point they’ll use their criminal proceeds to immigrate to a location with easier access to fentanyl, and crime will decrease.
Tom Savidge
Jul 30 2025 at 3:44pm
Assuming demand is in elastic, the decrease in supply (all else remaining equal) will raise the price of fentanyl. With demand being perfectly inelastic w/r/t price, quantity demanded will not change with the price increase.
This will likely increase the amount of total theft (or an increase in theft of higher-valued items) among fentanyl users, as they will want the same amount of fentanyl but will have to pay a higher price.
Manfred
Jul 30 2025 at 4:32pm
John Hall got it.
Perfectly inelastic supply is vertical. The crackdown on fentanyl moves the vertical supply curve to the left. Assuming a garden variety demand curve, downward sloping, price of fentanyl increases.
Thus, addicts must steal more.
Scott Sumner
Jul 30 2025 at 5:53pm
It’s the demand curve that’s assumed to be vertical. But otherwise you are correct–prices rise and addicts steal more.
Manfred
Jul 31 2025 at 3:18pm
What a dummy, of course – thank you Scott. Happens when you read on the fly. Thanks again.