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Law Enforcement and Bargaining over Illicit Drug Prices: Structural Evidence from a Gang’s Ledger

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  • Kaiwen Leong
  • Huailu Li
  • Marc Rysman
  • Christoph Walsh

Abstract

We estimate a structural model of bargaining between a branch of a large transnational gang and pushers using data from detailed records kept by the gang. The model allows for the gang’s relative bargaining power to differ for pushers with different characteristics, such as those with addictions or borrowing problems. Exploiting supply shocks in our data, we use the estimated model to study the effectiveness of various enforcement strategies. We find that targeting pushers is more effective at reducing quantities sold compared to targeting the gang’s upstream supply chain.

Suggested Citation

  • Kaiwen Leong & Huailu Li & Marc Rysman & Christoph Walsh, 2022. "Law Enforcement and Bargaining over Illicit Drug Prices: Structural Evidence from a Gang’s Ledger," Journal of the European Economic Association, European Economic Association, vol. 20(3), pages 1198-1230.
    • Handle: RePEc:oup:jeurec:v:20:y:2022:i:3:p:1198-1230.
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    File URL: http://hdl.handle.net/10.1093/jeea/jvac003
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    Cited by:

    1. Manuel Sánchez-Pérez & María Belén Marín-Carrillo & María Dolores Illescas-Manzano & Zohair Souilim, 2023. "Understanding the illegal drug supply chain structure: a value chain analysis of the supply of hashish to Europe," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-13, December.

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