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A Cournot equilibrium between Dark Net Market and Street market

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Abstract

This article contributes to the economic analysis of the illegal drug trade on either the Street or the Dark Net Market (DNM). For the sake of sim- plicity, it is assumed that there is a continuum of consumers with unitary demand for one drug. Their demand price varies from one market to the other according to the risks they bear in accessing it. The lower risk of vi- olence in the DNM implies that, ceteris paribus, the good delivered there is deemed higher quality. Vendors compete à la Cournot in quantity in their “home†market, selling homogeneous goods. However, the other market ex- erts a vertical competitive threat. The two markets are intertwined, and we model the case in which both are simultaneously in equilibrium.

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  • Bahamazava, Katsiaryna & Marchese, Carla & Privileggi, Fabio, 2023. "A Cournot equilibrium between Dark Net Market and Street market," Department of Economics and Statistics Cognetti de Martiis. Working Papers 202302, University of Turin.
    • Handle: RePEc:uto:dipeco:202302
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    2. Manolis Galenianos & Rosalie Liccardo Pacula & Nicola Persico, 2012. "A Search-Theoretic Model of the Retail Market for Illicit Drugs," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(3), pages 1239-1269.
    3. Manolis Galenianos & Alessandro Gavazza, 2017. "A Structural Model of the Retail Market for Illicit Drugs," American Economic Review, American Economic Association, vol. 107(3), pages 858-896, March.
    4. Manolis Galenianos & Alessandro Gavazza, 2017. "A Structural Model of the Retail Market for Illicit Drugs," American Economic Review, American Economic Association, vol. 107(3), pages 858-896, March.
    5. Craig A. Gallet, 2014. "Can Price Get The Monkey Off Our Back? A Meta‐Analysis Of Illicit Drug Demand," Health Economics, John Wiley & Sons, Ltd., vol. 23(1), pages 55-68, January.
    6. Jaskold Gabszewicz, J. & Thisse, J. -F., 1979. "Price competition, quality and income disparities," Journal of Economic Theory, Elsevier, vol. 20(3), pages 340-359, June.
    7. Klemperer, Paul D & Meyer, Margaret A, 1989. "Supply Function Equilibria in Oligopoly under Uncertainty," Econometrica, Econometric Society, vol. 57(6), pages 1243-1277, November.
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