The economics of the illicit drug market in the United States have been a source of much speculation and misinformation.
A key reason for this lack of knowledge relates to the inherent nature of drug selling. Drug distribution is an illegal business venture, and is therefore cloaked in secrecy in order to protect the participants who are engaged in what is often a dangerous enterprise. Because of the concealed nature of drug markets, few researchers have been able to penetrate their boundaries and gain the trust of participants in order to observe and describe these networks.
This briefing paper surveys the relative handful of studies that have been able to evaluate the workings of drug markets. These include data analyses of drug gang finances, surveys of convicted drug offenders, and ethnographic studies involving interviews with drug sellers. The findings of these various studies generally indicate that drug selling, while clearly illegal, shares many characteristics of other business enterprises. Further, many of the commonly held perceptions regarding the lucrative nature of the drug trade turn out to be significantly exaggerated.
To read the paper, download the PDF below.