The Price of Legitimacy
- Title
- The Price of Legitimacy
- Speaker(s)
- Speaker: Professor Heather Haveman # UC Berkeley
- Date and Time
- 27th Oct 2015 16:00 - 27th Oct 2015 18:00
- Location
- CMB Staff Room, 6th floor
- URL
- http://www.q-step.ed.ac.uk/community/events/other_events/2015/the_price_of_legitimacy
The Price of Legitimacy: Regulation, Risk, and Uncertainty in Legal Marijuana Markets
Professor Heather Haveman from the University of UC Berkeley will be giving a talk for our most recent Q-Step research seminar. Sociologists have challenged economic approaches to price on macro and micro levels, taking issue with economists’ focus on “the invisible hand” that brings supply and demand together, and the probabilistic rationality that allows actors to weigh risk and reward. Yet few sociologists have offered alternative explanations of price. In this paper, we adjudicate between economic and sociological approaches to risk, uncertainty, and price to show how new markets are more aptly characterized by uncertainty than risk, and how market institutions increase calculability in new markets, which is essential for estimating risk. We jointly estimate the central tendency and dispersion of price in new state-legal markets for marijuana in the U.S. We find that both supply and demand matter for price, as competition and customer both decrease price and price dispersion. We also find that in markets that are not regulated by states, legitimacy matters more than risk, as more legitimate markets have higher prices and more price dispersion than less legitimate markets. State regulation, in the form of licensing of market participants, makes markets more predictable and thus allows actors to transform uncertainty into risk, decreasing both price and price dispersion.
The event will take place at 4pm, 27th October in the 6th floor common room in the Chrystal Macmillan Building.
