A Search-Theoretic Model of the Retail Market for Illicit Drugs

Manolis Galenianos, Rosalie Pacula and Nicola Persico

The Review of Economic Studies, 2012, vol. 79, issue 3, 1239-1269

Abstract: A search-theoretic model of the retail market for illegal drugs is developed. Trade occurs in bilateral, potentially long-lived matches between sellers and buyers. Buyers incur search costs when experimenting with a new seller. Moral hazard is present because buyers learn purity only after a trade is made. This model is consistent with some new stylized facts about the drugs market, and it is informative for policy design. The effectiveness of different enforcement strategies is evaluated, including some novel ones that leverage the moral hazard present in the market. Copyright , Oxford University Press.

Date: 2012
References: Add references at CitEc
Citations: View citations in EconPapers (63)

Downloads: (external link)
http://hdl.handle.net/10.1093/restud/rds007 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: A Search-Theoretic Model of the Retail Market for Illicit Drugs (2009)
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:oup:restud:v:79:y:2012:i:3:p:1239-1269

Access Statistics for this article

The Review of Economic Studies is currently edited by Thomas Chaney, Xavier d’Haultfoeuille, Andrea Galeotti, Bård Harstad, Nir Jaimovich, Katrine Loken, Elias Papaioannou, Vincent Sterk and Noam Yuchtman

More articles in The Review of Economic Studies from Review of Economic Studies Ltd
Bibliographic data for series maintained by Oxford University Press ().