Law Enforcement and Bargaining over Illicit Drug Prices: Structural Evidence from a Gang’s Ledger
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Li, Huailu
Rysman, Marc
Walsh, Christoph
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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.
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Journal of the European Economic Association
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20
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3
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© The Author(s) 2022. Published by Oxford University Press on behalf of European Economic Association. This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial License (https://creativecommons.org/licenses/by-nc/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited. For commercial re-use, please contact journals.permissions@oup.com
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Leong, K; Li, H; Rysman, M; Walsh, C, Law Enforcement and Bargaining over Illicit Drug Prices: Structural Evidence from a Gang’s Ledger, Journal of the European Economic Association, 2022, 20 (3), pp. 1198-1230