The effect of government regulations in new market.

In 2012, both Colorado and Washington citizens passed ballot measures allowing the production, sale and use of marijuana for recreational purposes. In both cases, the ballot measure authorized the legislatures to develop regulatory regimes, and to impose taxes to pay for the regulation.

Will the legal market survive or thrive if the taxes cause prices to be higher than the blackmarket The impact of taxes depends critically on whether demand in the legal market price elastic or price inelastic, so use elasticity theory to explain your determination. Remember, the law of demand says that when price rises, quantity demanded falls. Elasticity helps us to answer the next question, “how much.”
In what market structure do the retail marijuana establishments operate (perfect competition, monopoly, monopolistic competition, oligopoly) Explain.

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