Underground Gun Markets
31 Pages Posted: 27 Nov 2007
Date Written: 0000
This article 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 teenagers 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 that transactions costs are considerable in the underground gun market in Chicago, and to some extent in other cities as well. The most likely explanation is that the underground gun market is both illegal and thin relevant information about trading opportunities is scarce due to illegality, which makes search costly for market participants and leads to a market thickness effect on transaction costs.
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