Table 1: Effect of Legislative Change by Model Model 1 •
Model 2
Reduces the non-monetary • Legalization -shift the demand • costs for the buyers only. curve upwards (increase) and quantity at any given price • Lower non-monetary will increase. costs, demand increases• upward shift in the demand • Legalization- supply curve curve. shifts downwards to the right (increase), resulting in a fall • Since supply will remain in the price and a rise in the illegal, little change is • quantity. expected on the supply side. • But with government setting price the actual impact will be uncertain.
Model 3 Elimination of all nonmonetary costs for both the user and the supplier. Upward shift of the demand curve and an increase in the quantity of the product, at any given price. Supply curve will shift downward (increase) and prices will fall due to the disappearance of nonmonetary costs, reinforced by competition among suppliers.
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Table 2: Summary of Legalization and Decriminalization Experiences