MicroEcon - Demand Supply Elasticity of Ketamine, K仔

Why is "mass" production good for Ketamine suppliers? It is because their revenues depend not only on how many they sell, but how many they sell and at what price they sell for! In other words, their profits depend on the "shape" of the demand curve - the elasticity of demand.

Some drug addicts can't live without this drug, so they will pay any price to get the drug. We call this group of die-hard fans the “price insensitive group”, who has an inelastic demand curve. Price change will not affect the quantity they demand. A very elastic demand curve, on the other hand, refers to the “price sensitive group” of customers, i.e. they will decide to buy or not to buy based on the price alone. A slight change in price may lure them to buy more or less.So, how does this apply to the current K-world? Drug dealers will set price low enough to lure you in, then, charge high price once you become an addict! They "control" the shape of the demand curve without their customers knowing it!

But how does that benefit them?K-suppliers did their homework. They charge high price for the loyal customers, the “price insensitive group”, and make money as the quantity demanded from this group does not change that much, i.e. inelastic. Their revenue increases when price is raised. However, this type of customers probably has reached their maximum demand of Ketamine and they will not buy anymore than the current quantity.

In order to explore new markets, the K-suppliers lay their eyes on the potential new customers, i.e. the teenagers in school. As the potential customers belong to the “price sensitive group”, the suppliers need to set the price low enough to lure them in. For this elastic demand curve, the more you produce, the more money you make - lower price lure more people to buy Ketamine, and the mass volume increases profit well beyond the profit loss due to lower price.

Due to the differences in consumer behaviors in the two groups, mass production will not help suppliers at all for those loyal customers, but only for those new-comers. Thus, the society needs to stop the new customers entering into the market; and I guess that's where the government needs to step in. Besides blocking the suppliers from entering into the region, or banishing all illegal market activities (both might be impossible to do in reality), another way is to put the money into education, i.e. showing all these horrible consequences of Ketamine addiction to the teenagers.

Here is a story that a friend, who is in the police force, shared with me (in Chinese):

Re-post from Hpong Lau: 我敢講，我接觸的吸毒人士，一定比一般人多......

All in all, Ketamine, or any kind of drug market, is a very serious sociology topic. However, from a pure scholastic study perspective, it is also quite interesting as a great deal of demand supply causation can be observed.