Price and purity analysis for illicit drug: Data and conceptual issues

Caulkins, Jonathan P.

doi:10.1016/j.drugalcdep.2006.08.014

Cited by 96 publications

(81 citation statements)

References 36 publications

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“…While a full legalization counterfactual requires many additional assumptions-for example, on the destruction rate δ , the efficiency of the matching process and the entry costs K B and K S -our analysis illustrates that the dispersion of quality of drugs will decrease and the average quality of drugs will increase if buyers gain better information. The reduction in quality dispersion may bring health benefits: Caulkins (2007) argues that greater variability in purity predicts overdoses because users inadvertently consume more pure drug than they intend to when they purchase drugs that are more pure than is typical; at the same time, the increase in average quality may increase aggregate consumption and, thus, may bring health costs. However, the results in Table 4 suggest that this aggregate increase will not be large, curbing these additional costs.…”

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confidence: 99%

A Structural Model of the Retail Market for Illicit Drugs

Galenianos

Gavazza

2017

American Economic Review

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We estimate a model of illicit drugs markets using data on purchases of crack cocaine. Buyers are searching for high-quality drugs, but they determine drugs' quality (i.e., their purity) only after consuming them. Hence, sellers can rip off first-time buyers or can offer higher-quality drugs to induce buyers to purchase from them again. In equilibrium, a distribution of qualities persists. The estimated model implies that if drugs were legalized, in which case purity could be regulated and hence observable, the average purity of drugs would increase by approximately 20 percent and the dispersion would decrease by approximately 80 percent. Moreover, increasing penalties may raise the purity and affordability of the drugs traded by increasing sellers' relative profitability of targeting loyal buyers versus first-time buyers. (JEL D12, K42, L15, L65)

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confidence: 99%

A Structural Model of the Retail Market for Illicit Drugs

Galenianos

Gavazza

2017

American Economic Review

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“…This was demonstrated by the "Expected Purity Hypothesis" developed by Caulkins (1994), which states that a key factor that influences drug prices are consumers' perceptions of the drug's potency. Given that drugs are "experience goods" purchasers are often unable to assess their quality until after consumption Caulkins, 2007). Additionally, even after consumption it is difficult for the user to estimate the drugs purity, as some cutting agents have psychoactive effects distorting their perception of the drugs quality .…”

Section: Economic Analysis: Price Determinantsmentioning

confidence: 99%

Precursors and Prices

Ouellet

Morselli

2013

Journal of Drug Issues

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Research gathered on synthetic drug markets trails behind studies on other illegal drug markets. Synthetic drug's relatively recent classification as an illicit substance, coupled with its distinct characteristics that insulate it from detection has hindered the development of reliable assessments of the markets structural features. The purpose of this study is to provide reliable insight into the inner dynamics of Quebec's synthetic drug industry, focusing on its organizational features. Using information derived from 365 synthetic drugs seized by law enforcement over a one year period, this study will merge two techniques, drug composition and economic analyses, under a common framework to derive reliable and comprehensive assessments of the structure of Quebec's synthetic drug market. Drug composition analysis examines the drug's chemical and physical profile to make inferences about the market structure while the economic analysis examines price determinants for the same market, providing further insight into its dynamics and distinctive features. Findings from the drug composition analysis indicate that the synthetic drug market in Quebec is likely to be composed of a high number of small structures, indicating a competitive market. The economic analysis provided complementary information, finding that both differential production costs and trafficker-consumer relations may influence price variations, depending on the region. This study concludes by emphasizing that drug composition analysis should be diligently pursued by both researchers and enforcement organizations alike to effectively target and enhance our understanding of the intricate processes that underlie the synthetic drug market. iv

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“…Chapter 5 used data on police arrests for drug possession as an indirect measure of variations in drug availability in the community. Some have argued that arrest data of this type is not a valid measure of drug supply because changes in political focus or policing activity may also lead to an increase in arrests independent of changes in drug availability (Caulkins, 2007;Rosenfeld and Decker, 1999). However, there are also limitations to other potential indicators.…”

Section: Limitationsmentioning

confidence: 99%

“…In particular price data may be a less sensitive measure of availability, because in variations in supply drug suppliers will typically modify drug purity (e.g. "cutting" drugs with other substances) in order to maintain standardised sale amounts and prices (Caulkins, 2007).…”

Section: Limitationsmentioning

confidence: 99%

“…Three indirect measures of drug supply have typically been used: drug price (Cunningham et al, 2013a;Hyatt and Rhodes, 1995;Cook et al, 2002;Caulkins, 2007;Johnson and Golub, 2007), drug purity Hyatt and Rhodes, 1995;Caulkins, 2007) and drug-related arrests or seizures (Cunningham and Liu, 2005;Rosenfeld and Decker, 1999) . Chapter 5 used data on police arrests for drug possession as an indirect measure of variations in drug availability in the community.…”

Section: Limitationsmentioning

confidence: 99%

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Stimulant use disorders and psychosis: prevalence, correlates and impacts

Sara¹

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Price and purity analysis for illicit drug: Data and conceptual issues

Cited by 96 publications

References 36 publications

A Structural Model of the Retail Market for Illicit Drugs

A Structural Model of the Retail Market for Illicit Drugs

Precursors and Prices

Stimulant use disorders and psychosis: prevalence, correlates and impacts

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