Drug Selling

Abstract

We use a unique and extensive dataset from a Singaporean drug-selling gang to study gang economics. The gang had a three-level hierarchy: (1) The boss was the sole person in charge of procuring drugs; (2) the assistants bought drugs from the boss, and set prices to the pushers; (3) the pushers estimated end-user demand before purchasing drugs from the assistant. We focus on the interactions between the assistants and pushers. We find that assistants were rational in learning about the pushers’ abilities. Ability reflected the total dollar value of drugs the pushers would purchase from the assistant, therefore providing an indication of future profits. Our results show that assistants strategically rewarded pushers using a non-monotonic incentive structure. Pushers subsequently responded strategically to monetary incentives.

1 Introduction

Despite the tremendous amounts of resources allocated by governments worldwide just to collect intelligence on how to combat organized crime, organized syndicates still manage to evade the law and thrive. Yet, very little academic literature has...