Ever since the beginning of the American state’s so-called war on drugs, there has been a significant increase in drug potency, which resembles the trend that occurred during alcohol prohibition in the twentieth century. However, what causes such trends?
We gain some insight from the Alchian-Allen theorem, which tells us that increases in drug potency occur in response to changes in the cost and incentive structure. Often, this is a result of drug-enforcement legislation.
The Alchian-Allen Theorem