Whither the Price of Party Pills? A Guest Post
A story on the Internet noted that New Zealand is banning the so-called party pill, a stimulant that is already illegal in the U.S. The ban goes into effect April 1. Sales after that date are outlawed, and possession will be illegal after October 1.
The fines on sellers after April 1 will no doubt cause a decrease in supply, and prices will rise while the quantity sold falls; but what will happen to prices before then?
Sellers need to unload their soon-to-be-illegal stocks of the pills, and the short-run increase in supply that results will drive prices down. But pill consumers, knowing the price will eventually rise, will want to buy now when the pills are still available, causing a short-run increase in demand. I would bet that sales will be very brisk in the next three weeks — there will be a lot of exciting parties in New Zealand! But whether prices will be above or below the level they were at before the ban was passed is unclear.