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The long-run fall in the prices of hard drugs: an explanation

Author

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  • Leonardo Raffo López

    (Universidad del Valle)

Abstract

The goal of this research is to advance in the comprehension of illicit hard drug markets and to explain the long-run fall exhibited by the prices of hard drugs during the last three decades. Following Poret and Téjedo’s (2006) approach, an analytical model was developed to understand the performance of hard drug markets taking into account the influence of the drug trafficking and distribution networks that support them. This represents a contribution in the field of crime economics and, in particular, in the line of research pertaining to the economic theory of illegal goods. The model proves some key results about the functioning of illegal markets. Among them, that the expansion and densification of drug trafficking and distribution networks are powerful forces that explain to some extent the long-run fall in hard drug prices.

Suggested Citation

  • Leonardo Raffo López, 2015. "The long-run fall in the prices of hard drugs: an explanation," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 83, pages 63-96, Julio - D.
    • Handle: RePEc:lde:journl:y:2015:i:83:p:63-96
    DOI: 10.17533/udea.le.n83a03
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    More about this item

    Keywords

    drug trafficking; delinquent networks; illegal markets; game theory; social networks; law enforcement.;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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