The economic functioning of online drugs markets

V Bhaskar, Robin Linacre and Stephen Machin

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: The economic functioning of online drug markets using data scraped from online platforms is studied. Analysis of over 1.5 million online drugs sales shows online drugs markets tend to function without the significant moral hazard problems that, a priori, one might think would plague them. Only a small proportion of online drugs deals receive bad ratings from buyers, and online markets suffer less from problems of adulteration and low quality that are a common feature of street sales of illegal drugs. Furthermore, as with legal online markets, the market penalizes bad ratings, which subsequently lead to significant sales reductions and to market exit. The impact of the well-known seizure by law enforcement of the original Silk Road and the shutdown of Silk Road 2.0 are also studied, together with the exit scam of the market leader at the time, Evolution. There is no evidence that these exits deterred buyers or sellers from online drugs trading, as new platforms rapidly replaced those taken down, with the online market for drugs continuing to grow

Keywords: dark web; drugs (search for similar items in EconPapers)
JEL-codes: K42 (search for similar items in EconPapers)
Date: 2017-08-01
New Economics Papers: this item is included in nep-com, nep-hea, nep-law and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://eprints.lse.ac.uk/86585/ Open access version. (application/pdf)

Related works:
Journal Article: The economic functioning of online drugs markets (2019)
Working Paper: The economic functioning of online drugs markets (2017)
Working Paper: The economic functioning of online drugs markets (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:86585

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().