Addicts, Fences, and the Market for Stolen Goods

Examination of the literature of the heroin problem in the United States Reveals that there has been scant attention paid to the type of property crime specialized in by addicts or to the marketing network of addict-stolen goods. This paper begins to remedy both neglects by focusing on merchandise theft as a primary source of income for the heroin addict. A methodology is developed for estimating the income addicts receive for merchandise that they steal. Next a method is discussed for determining the type of middlemen who purchase stolen merchandise from addicts and how much they mark up the items before retailing them in the secondhand goods market. This yields estimates for the retail value of goods stolen and the gross revenue to middlemen. Since addicts tend to sell stolen items to otherwise legitimate businessmen, not underground fences as is widely believed, there appears to be substantial scope for reducing merchandise theft by instituting stricter regulations on the sale of secondhand goods. A system for providing middlemen with telephone access to a computerized “hot-list†is recommended. Stricter regulation of the middlemen would lower the effective wage of stealing and raise the relative price of heroin. Under reasonable assumptions about addict preferences, it is shown that such a policy would result in a decrease in the total amount of theft.