Bhaskar, V., Linacre, Robin and Machin, Stephen (2017) The economic functioning of online drugs markets. CEP Discussion Papers (CEPDP1490). London School of Economics and Political Science. Centre for Economic Performance, London, UK.
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Abstract
The economic functioning of online drug markets using data scraped from online platforms is studied. Analysis of over 1.5 million online drugs sales shows online drugs markets tend to function without the significant moral hazard problems that, a priori, one might think would plague them. Only a small proportion of online drugs deals receive bad ratings from buyers, and online markets suffer less from problems of adulteration and low quality that are a common feature of street sales of illegal drugs. Furthermore, as with legal online markets, the market penalizes bad ratings, which subsequently lead to significant sales reductions and to market exit. The impact of the well-known seizure by law enforcement of the original Silk Road and the shutdown of Silk Road 2.0 are also studied, together with the exit scam of the market leader at the time, Evolution. There is no evidence that these exits deterred buyers or sellers from online drugs trading, as new platforms rapidly replaced those taken down, with the online market for drugs continuing to grow
| Item Type: | Monograph (Discussion Paper) |
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| Official URL: | http://cep.lse.ac.uk/ |
| Additional Information: | © 2017 The Authors |
| Divisions: | Centre for Economic Performance |
| Subjects: | H Social Sciences > HF Commerce H Social Sciences > HV Social pathology. Social and public welfare. Criminology |
| JEL classification: | K - Law and Economics > K4 - Legal Procedure, the Legal System, and Illegal Behavior > K42 - Illegal Behavior and the Enforcement of Law |
| Date Deposited: | 30 Jan 2018 12:29 |
| Last Modified: | 19 Apr 2024 19:24 |
| Funders: | Economic and Social Research Council |
| URI: | http://eprints.lse.ac.uk/id/eprint/86585 |
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