Uncertainty and risk: A framework for understanding pricing in online drug markets.
Cryptomarkets
Drug prices
Economic sociology
Illicit markets
Online drug markets
Risks and prices
Journal
The International journal on drug policy
ISSN: 1873-4758
Titre abrégé: Int J Drug Policy
Pays: Netherlands
ID NLM: 9014759
Informations de publication
Date de publication:
03 2022
03 2022
Historique:
received:
05
04
2021
revised:
16
10
2021
accepted:
11
11
2021
pubmed:
14
12
2021
medline:
9
4
2022
entrez:
13
12
2021
Statut:
ppublish
Résumé
The pricing of illicit drugs is typically approached within the risks and prices framework. Recent sociological and economic studies of prices in online drug markets have stressed the centrality of reputation for price formation. In this paper, we propose an account of price formation that is based on the risks and prices framework, but also incorporates internal social organization to explain price variation. We assess the model empirically, and extend the current empirical literature by including payment methods and informal ranking as influences on drug pricing. We apply our model to estimate the prices of cannabis, cocaine, and heroin in two online drug markets, cryptomarkets (n = 92.246). Using multilevel linear regression, we assess the influence of product qualities, reputation, payment methods, and informal ranking on price formation. We observe extensive quantity discounts varying across substances and countries, and find premia and discounts associated with product qualities. We find evidence of payment method price adjustment, but contrary to expectation we observe conflicting evidence concerning reputation and status. We assess the robustness of our findings concerning reputation by comparing our model to previous approaches and alternative specifications. We contribute to an emerging economic sociological approach to the study illicit markets by developing an account of price formation that incorporates cybercrime scholarship and the risks and prices framework. We find that prices in online drug markets reflect both external institutional constraint and internal social processes that reduce uncertainty.
Sections du résumé
BACKGROUND
The pricing of illicit drugs is typically approached within the risks and prices framework. Recent sociological and economic studies of prices in online drug markets have stressed the centrality of reputation for price formation. In this paper, we propose an account of price formation that is based on the risks and prices framework, but also incorporates internal social organization to explain price variation. We assess the model empirically, and extend the current empirical literature by including payment methods and informal ranking as influences on drug pricing.
METHODS
We apply our model to estimate the prices of cannabis, cocaine, and heroin in two online drug markets, cryptomarkets (n = 92.246). Using multilevel linear regression, we assess the influence of product qualities, reputation, payment methods, and informal ranking on price formation.
RESULTS
We observe extensive quantity discounts varying across substances and countries, and find premia and discounts associated with product qualities. We find evidence of payment method price adjustment, but contrary to expectation we observe conflicting evidence concerning reputation and status. We assess the robustness of our findings concerning reputation by comparing our model to previous approaches and alternative specifications.
CONCLUSION
We contribute to an emerging economic sociological approach to the study illicit markets by developing an account of price formation that incorporates cybercrime scholarship and the risks and prices framework. We find that prices in online drug markets reflect both external institutional constraint and internal social processes that reduce uncertainty.
Identifiants
pubmed: 34902806
pii: S0955-3959(21)00453-9
doi: 10.1016/j.drugpo.2021.103535
pii:
doi:
Substances chimiques
Illicit Drugs
0
Heroin
70D95007SX
Types de publication
Journal Article
Research Support, Non-U.S. Gov't
Langues
eng
Sous-ensembles de citation
IM
Pagination
103535Commentaires et corrections
Type : ErratumIn
Informations de copyright
Copyright © 2021 The Authors. Published by Elsevier B.V. All rights reserved.
Déclaration de conflit d'intérêts
Declarations of Interest The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.