Putting a price on drugs: An economic sociological study of price formation in illegal drug markets

Kim Møller, Sveinung Sandberg

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

Prices in illegal drug markets are difficult to predict. Based on qualitative interviews with 68 incarcerated drug dealers in Norway, we explore dealers’ perspectives on fair prices and the processes that influence their pricing decisions. Synthesized through economic sociology, we draw on perspectives from traditions as different as behavioral economics and cultural analysis to demonstrate how participants in illicit drug distribution base their pricing decisions on institutional context, social networks, and drug market cultures. We find that dealers take institutional constraints into consideration and search for niches with high earnings and low risks. The use of transactions embedded in social networks promotes a trusting form of governance, which enables strategic network management and expedient distribution but also uncompetitive pricing. Finally, dealers’ pricing decisions are embedded in three different cultures narratives: business, friendship, and street cultural stories, with widely varying implications for prices. Our findings demonstrate how an economic sociology of illicit drug distribution can extend insights from behavioral economics and cultural studies into a coherent criminology of illegal drug markets.

Original languageEnglish
JournalCriminology
Volume57
Issue number2
ISSN0011-1384
DOIs
Publication statusPublished - 2019

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formation of prices
Behavioral Economics
Economics
drug
Costs and Cost Analysis
Sociology
pricing
market
Street Drugs
Social Support
Pharmaceutical Preparations
economics
economic sociology
Criminology
social network
Norway
cultural analysis
criminology
Interviews
cultural studies

Cite this

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abstract = "Prices in illegal drug markets are difficult to predict. Based on qualitative interviews with 68 incarcerated drug dealers in Norway, we explore dealers’ perspectives on fair prices and the processes that influence their pricing decisions. Synthesized through economic sociology, we draw on perspectives from traditions as different as behavioral economics and cultural analysis to demonstrate how participants in illicit drug distribution base their pricing decisions on institutional context, social networks, and drug market cultures. We find that dealers take institutional constraints into consideration and search for niches with high earnings and low risks. The use of transactions embedded in social networks promotes a trusting form of governance, which enables strategic network management and expedient distribution but also uncompetitive pricing. Finally, dealers’ pricing decisions are embedded in three different cultures narratives: business, friendship, and street cultural stories, with widely varying implications for prices. Our findings demonstrate how an economic sociology of illicit drug distribution can extend insights from behavioral economics and cultural studies into a coherent criminology of illegal drug markets.",
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Putting a price on drugs : An economic sociological study of price formation in illegal drug markets. / Møller, Kim; Sandberg, Sveinung.

In: Criminology, Vol. 57, No. 2, 2019.

Research output: Contribution to journalJournal articleResearchpeer-review

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T2 - An economic sociological study of price formation in illegal drug markets

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AU - Sandberg, Sveinung

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