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Underground Gun Markets

Author

Listed:
  • Philip J. Cook
  • Jens Ludwig
  • Sudhir Venkatesh
  • Anthony A. Braga

Abstract

This paper provides an economic analysis of underground gun markets drawing on interviews with gang members, gun dealers, professional thieves, prostitutes, police, public school security guards and teens in the city of Chicago, complemented by results from government surveys of recent arrestees in 22 cities plus administrative data for suicides, homicides, robberies, arrests and confiscated crime guns. We find evidence of considerable frictions in the underground market for guns in Chicago. We argue that these frictions are due primarily to the fact that the underground gun market is both illegal and "thin" -- the number of buyers, sellers and total transactions is small and relevant information is scarce. Gangs can help overcome these market frictions, but the gang's economic interests cause gang leaders to limit supply primarily to gang members, and even then transactions are usually loans or rentals with strings attached.

Suggested Citation

  • Philip J. Cook & Jens Ludwig & Sudhir Venkatesh & Anthony A. Braga, 2005. "Underground Gun Markets," NBER Working Papers 11737, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:11737
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    References listed on IDEAS

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    1. Anne Morrison Piehl & Suzanne J. Cooper & Anthony A. Braga & David M. Kennedy, 2003. "Testing for Structural Breaks in the Evaluation of Programs," The Review of Economics and Statistics, MIT Press, vol. 85(3), pages 550-558, August.
    2. Gan, Li & Li, Qi, 2016. "Efficiency of thin and thick markets," Journal of Econometrics, Elsevier, vol. 192(1), pages 40-54.
    3. Gan, Li & Zhang, Qinghua, 2006. "The thick market effect on local unemployment rate fluctuations," Journal of Econometrics, Elsevier, vol. 133(1), pages 127-152, July.
    4. Diamond, Peter A, 1982. "Aggregate Demand Management in Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 881-894, October.
    5. Mark Duggan, 2001. "More Guns, More Crime," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 1086-1114, October.
    6. Donohue John, 2004. "Clinton and Bush's Report Cards on Crime Reduction: The Data Show Bush Policies Are Undermining Clinton Gains," The Economists' Voice, De Gruyter, vol. 1(1), pages 1-10, September.
    7. Roland G. Fryer & Paul S. Heaton & Steven D. Levitt & Kevin M. Murphy, 2005. "Measuring the Impact of Crack Cocaine," NBER Working Papers 11318, National Bureau of Economic Research, Inc.
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    Cited by:

    1. repec:pri:indrel:dsp010p096690c is not listed on IDEAS
    2. Philip J. Cook & Jens Ludwig & Adam Samaha, 2010. "Gun Control after "Heller": Litigating against Regulation," NBER Chapters, in: Regulation vs. Litigation: Perspectives from Economics and Law, pages 103-135, National Bureau of Economic Research, Inc.
    3. Brendan O'Flaherty & Rajiv Sethi, 2010. "Peaceable Kingdoms and War Zones: Preemption, Ballistics and Murder in Newark," NBER Chapters, in: The Economics of Crime: Lessons For and From Latin America, pages 305-353, National Bureau of Economic Research, Inc.
    4. Jens Ludwig & Jeffrey R. Kling, 2007. "Is Crime Contagious?," Journal of Law and Economics, University of Chicago Press, vol. 50(3), pages 491-518.
    5. Philip J. Cook & Jens Ludwig, 2006. "Aiming for evidence-based gun policy," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 25(3), pages 691-735.

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    More about this item

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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