Heroin prohibition and the incentive for collusion

The market for heroin is modelled as a simple Cournot game between two play ers, one of whom is dominant, and where information concerning police activities is a symmetric. It is shown that under these conditions the dominant player has a unilateral incentive to encourage increased harassment of the other player. Within this framework, a policy of increased seller harassment reduces heroin consumption in the current period. However, if the policy is only temporary, then the long-term results could include an increase in the consumption of heroin if the dominant player employs its en hanced capacity for future heroin marketing and police-corrupting activities.