Economic analysis of drug transaction 'cycles' described by incarcerated UK drug dealers

Global Crime

Volumn 10, Issue 1-2, 2009, Pages 94-112

  Caulkins, Jonathan P ^a   Gurga, Benjamin ^a   Little, Christopher ^a  

^a CARNEGIE MELLON UNIVERSITY   (United States)

Author keywords

Drug distribution; Drug policy; Drug prices; Economic analysis

Indexed keywords

EID: 68149158438     PISSN: 17440572     EISSN: 17440580     Source Type: Journal    
DOI: 10.1080/17440570902783889     Document Type: Article

References (56)

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2. Jonathan P. Caulkins, Bruce Johnson, Angela Taylor and Lowell Taylor, 'What Drug Dealers Tell Us About Their Costs of Doing Business', The Journal of Drug Issues 29, no. 2 (1999): 323-40.
3. Jonathan P. Caulkins, 'Is Crack Cheaper than (Powder) Cocaine?', Addiction 92, no. 11 (1997): 1437-43
4. R. Coomber, 'The Adulteration of Drugs - What Dealers Do, What Dealers Think', Addiction Research 5 (1997): 297-306.
5. The term 'branching factor' comes from recognizing that the distribution network looks like an (upside down) 'tree', with a node (individual dealer or dealing organization) at one level usually supplying multiple nodes at the next lower level. The number of branches coming out of a node is called its branching factor.
6. Mangai Natarajan and Mike Hough (eds), Illegal Drug Markets: From Research to Prevention Policy, Crime Prevention Studies Volume 11 (New York: Criminal Justice Press, 2000).
7. Damian Zaitch, Trafficking Cocaine: Colombian Drug Entrepreneurs in the Netherlands (The Hague: Kluwer Law International, 2002).
8. Jonathan P. Caulkins and Peter Reuter, 'What Price Data Tell Us About Drug Markets', Journal of Drug Issues 28, no. 3 (1998): 593-612
9. and Frederick Desroches, 'Research on Upper Level Drug Trafficking: A Review', Journal of Drug Issues, 37 (2007): 827-44.
10. Financial records: Steven Levitt and Sudhir A. Venkatesh, 'An Economic Analysis of a Drugselling Gang's Finances', Quarterly Journal of Economics 115, no. 3 (2000): 755-89.
11. Wire taps: Mangai Natarajan, 'Understanding the Structure of a Large Heroin Distribution Network: A Quantitative Analysis of Qualitative Data', Quantitative Journal of Criminology 22, no. 2 (2006): 171-92.
12. Prosecution files: Joseph R. Fuentes, 'Life of a Cell: Managerial Practice and Strategy in Colombian Cocaine Distribution in the United States' (PhD diss., City University of New York, 1998).
13. Peter Reuter and John Haaga, The Organization of High-Level Drug Markets: An Exploratory Study (Santa Monica, CA: RAND 1989)
14. Frederick Desroches, The Crime that Pays: Drug Trafficking and Organized Crime in Canada (Toronto: Canadian Scholars' Press 2005)
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16. Geoffrey Pearson and Dick Hobbs, 'Middle Market Drug Distribution', Home Office Research Study, 227 (London: Home Office, 2001), http://www.homeoffice.gov.uk/rds/pdfs/hors227.pdf
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20. Matrix Knowledge Group, 'The Illicit Drug Trade in the United Kingdom'.
21. Caulkins and Reuter, 'What Price Data Tell Us About Drug Markets'.
22. Michael Grossman, 'Individual Behaviors and Substance Use: The Role of Price', in Substance Use: Individual Behaviors, Social Interactions, Markets and Politics, ed. Bjorn Lindgren and Michael Grossman (Amsterdam: Elsevier, 2005).
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28. Timothy Moore et al., Heroin Markets in Australia: Current Understanding and Future Possibilities. DPMP Monograph Series (Fitzroy, Australia: Turning Point Alcohol and Drug Centre 2005)
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30. and Dhaval Dave, 'Illicit Drug Use Among Arrestees, Prices and Policy', Journal of Urban Economics 63, no. 2 (2008): 694-714.
31. Jonathan P. Caulkins and Rema Padman, 'Quantity Discounts and Quality Premia for Illicit Drugs', Journal of the American Statistical Association, 88, no. 423 (1993): 748-57.
32. Ibid
33. and Jonathan P. Caulkins et al., The Price and Purity of Illicit Drugs: 1981 Through the Second Quarter of 2003. Report prepared by RAND and published by the Office of National Drug Control Policy as Publication no. NCJ 207768, 2004.
34. Jonathan P. Caulkins, Developing Price Series for Cocaine (Santa Monica, CA: RAND 1994).
35. Jonathan P. Caulkins, 'Modeling the Domestic Distribution Network for Illicit Drugs', Management Science 43, no. 10 (1997): 1363-71
36. Barry Crane, Rex Rivolo and Gary Comfort, An Empirical Examination of Counterdrug Interdiction Program Effectiveness (Virginia: Institute for Defense Analysis, 1997)
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38. Clements, 'Pricing and Packaging'.
39. Jeffrey A. Miron, 'The Effect of Drug Prohibition on Drug Prices: Evidence from the Markets for Cocaine and Heroin', The Review of Economics and Statistics, 85, no. 3 (2003): 522-30.
40. Caulkins and Reuter, 'What Price Data Tell Us About Drug Markets'.
41. Natarajan and Hough (eds), Illegal Drug Markets
42. and Reuter and Haaga, The Organization of High-Level Drug Markets.
43. Matrix Knowledge Group, 'The Illicit Drug Trade in the United Kingdom'.
44. Peter Reuter and M.A.R. Kleiman, 'Risks and Prices: An Economic Analysis of Drug Enforcement', Crime and Justice: An Annual Review 7, (1986): 289-340.
45. Caulkins and Reuter, 'What Price Data Tell Us About Drug Markets'.
46. Cláudia Costa Storti and Paul De Grauwe, 'Globalization and the Price Decline of Illicit Drugs', International Journal of Drug Policy, 20(1) (2009): 48-61.
47. Ilyana Kuziemko and Steven D. Levitt, 'An Empirical Analysis of Imprisoning Drug Offenders', Journal of Public Economics (2004): 2043-66
48. and Jonathan P. Caulkins and Robert MacCoun. 'Limited Rationality and the Limits of Supply Reduction', Journal of Drug Issues, 33, no. 2 (2003): 433-464.
49. Matrix Knowledge Group, 'The Illicit Drug Trade in the United Kingdom'.
50. Matrix Knowledge Group, 'The Illicit Drug Trade in the United Kingdom'.
51. Pierre Tremblay and Carlo Morselli, 'Patterns in Criminal Achievement: Wilson and Abrahamse Revisited', Criminology 38, no. 2 (2006): 633-57
52. and Desroches, The Crime that Pays.
53. Two other respondents with Liverpool connections at this market level operated somewhat earlier in time, when prices were higher, but they had at least roughly the same markup as respondent B. Respondent C bought 10-15 kg at a time for £16,000/kg from an organization that brought 100 kg shipments from Pakistan or Turkey into British ports (London, Liverpool and Dover) via Europe in hidden compartments in transport trucks (apparently good ones, costing £20,000-30,000 to make). Respondent C would sell on in units of 0.5, 2-3 and 4-5 kg for £18,500 per kg. Respondent C helped the importing operation by referring a trustworthy truck driver to them and called the importer his 'supplier/partner', but otherwise had no involvement in importing. Finally, respondent D bought 50 kg at a time from Turkish suppliers in Liverpool for £14,000 per kg and re-sold for £18,000 per kg. Interestingly, respondent D quit that business twice. After three years operating at these levels he was arrested and took a 10 month break from dealing to buy legitimate companies and doctor their books in a (successful) attempt to look legitimate and avoid conviction. Then, after a few more years he quit to focus on spending the money he had made. Some years later he was convicted for attempting to import cocaine from South America.
54. Coomber, 'The Adulteration of Drugs'.
55. Caulkins and Padman, 'Quantity Discounts and Quality Premia for Illicit Drugs'
56. and Jeremy Arkes, Rosalie Liccardo Pacula, Susan Paddock, Jonathan P. Caulkins and Peter Reuter, Technical Report for the Price and Purity of Illicit Drugs Through 2003. RAND Technical Report prepared for the ONDCP (Santa Monica, CA: RAND, 2004).