Drug Market Criminology

• DOI: 10.1177/1057567717746215
• Published date: 01 September 2018
• Author: Kim Moeller
• Date: 01 September 2018
• Subject Matter: Articles

Article
International Criminal Justice Review
2018, Vol. 28(3) 191-205
Drug Market Criminology:
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DOI: 10.1177/1057567717746215
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Criminological Research on
Illicit Drug Markets
Kim Moeller1
Abstract
There is a divide between economic and criminological research on illicit drug markets. Economists
have focused on modeling markets at an abstract level, while criminologists have focused on
offending in individual street-level marketplaces. This article combines the economic and crimin-
ological research on illicit drug markets through the lens of social embeddedness theory. The
analysis concerns how participants reduce the uncertainties that follow from the illegality of the
product, the lack of reliable information on product quality, and the trustworthiness of the trading
partner. Social embeddedness theory is reconcilable with transaction cost economics but puts more
emphasis on the importance of longer term interpersonal relations and trust. Using this framework
provides a middle-range interpretation for the economic irregularities observed in drug markets:
how prices deviate from the competitive equilibrium and how distributors develop and maintain
interpersonal trust and balance competitiveness with security concerns.
Keywords
drug market, criminology, social embeddedness, economic sociology, transaction cost economics
Illicit drug distribution has been analyzed since at least the late 1960s (Carey, 1968; Preble &
Casey, 1969), but little criminological research has examined the “market” aspects (Bushway &
Reuter, 2008). Market is broadly understood as the exchange of goods for money under competition
(Beckert & Wehinger, 2013). These issues are typically seen as being in the domain of economics
and this is also where most of the theoretical (Becker & Murphy, 1988; Rasmussen, Benson, &
Mocan, 1998; Reuter & Kleiman, 1986) and empirical drug market research has been conducted
(e.g., Miron, 2005; Pacula, Kilmer, Grossman, & Chaloupka, 2010; Rasmussen & Benson, 1994).
In the early 2000s, there was an increased interest in illicit drug market research. Ritter (2006)
reviewed five disciplinary contributions, revealing a fragmented understanding of what constitutes a
market. Different social scientific disciplines ask different types of questions and examine different
1 Aalborg University, Aalborg, Denmark
Corresponding Author:
Kim Moeller, Aalborg University, Kroghstraede 7, 9220 Aalborg, Denmark.
Email: km@socsci.aau.dk

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International Criminal Justice Review 28(3)
levels of analysis. Simplified, we may say that economists have tried to formally model the market
as an abstract whole, while criminologists have researched individual street-level marketplaces. I
refer to “criminology” as a traditionally sociologically and anthropologically inclined discipline
(McCarthy, 2002), while recognizing that an interdisciplinary understanding of crime and control
also includes economics.
Many economic irregularities still puzzle researchers (Caulkins & Reuter, 2006), but there is no
criminological theory of illicit drug markets (Bushway & Reuter, 2008). A similar disciplinary
divide manifests in the research on legal economic phenomena. Krippner (2001, p. 801) observed
a “perverse symmetry” when “researchers either study economic processes in social terms, in which
case they abandon the sphere of the market; or, they study the market as a theoretical entity in its
own right, in which case they purge all social content.”
Historically, researchers working in an economic sociological tradition have attempted to unify
these perspectives by explaining economic processes as a category of social action (Swedberg, 2003;
Weber, 1922/1978). Here, markets are understood as “socially constructed arenas where repeated
exchanges occur between buyers and sellers under a set of formal rules and informal understandings
that govern relations among competitors, suppliers, and customers” (Fligstein & Dioun, 2015, p. 67).
The market concept is recognized as an abstraction that gathers what is a series of markets with
different levels and features. Markets in different countries at different times will vary in pricing
practices and competition, depending on the surrounding legal circumstances and cultural under-
standings (Carruthers, 2005; Reuter & Pollack, 2012; Swedberg, 1990). Some markets are higher in
“marketness” than others (Block, 1990, p. 53). The degree of marketness can be observed in the
relative importance of the price consideration compared to more social concerns like status and
friendship.
When compared to legal markets, illicit drug distribution is low on marketness. The constant
threat of law enforcement intervention implies there are many concerns more important than max-
imizing profit. This hostile surrounding social context makes the distribution process uncertain.
Emphasis in the criminological drug market research has been on the street level (Dorn, Levi, &
King, 2005; Mieczkowski, 1988; Natarajan, 2006; Pearson & Hobbs, 2003), possibly because of the
practical problems associated with recruiting participants at the higher distribution levels (but see
Adler, 1985; Levitt & Venkatesh, 2000; Moeller & Sandberg, 2015, 2017; Zaitch, 2002, 2005). At
the street level, sellers routinely cheat strangers (Jacques, Wright, & Allen, 2014). At the higher
distribution levels, participants prioritize their security over operational efficiency (Bichler, Malm,
& Cooper, 2017).
The problems that follow from uncertainty permeate all levels of the distribution process. Uncer-
tainty is a fundamental problem for drug distribution because all markets need calculability (Car-
ruthers, 2013; Weber, 1922/1978). Illicit drug transactions are characterized by lack of information
and thus inherent incalculability (Reuter & Kleiman, 1986), but somehow the illicit drug market
does not collapse. This is because offenders devise ways to reduce uncertainties and learn to trust
each other, despite temptations to act opportunistically and cheat. The specificities of how they do so
require a more detailed and theorized explication of the problems they confront.
Beckert and Wehinger (2013, p. 12; see also Beckert, 2009; Carruthers, 2013) proposed that this
uncertainty can be conceptualized as three “coordination problems”: valuation, competition, and
cooperation. In this social embeddedness perspective, valuation concerns the problems with pricing
products in a transaction affected by an interpersonal relation. Above the street level, these are not
anonymous transactions but take place in personalized networks where reputation is important,
which restricts competitive pricing (Granovetter, 1985). Competition is hindered by the need for
secrecy. Operating in direct opposition to the law means market participants must make trade-offs
between their security and the efficiency of distribution (Bichler et al., 2017). Finally, participants
must find ways to trust each other. The lack of contracts and formal agreements implies there are

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many ways to cheat or otherwise act opportunistically. In illegal markets, informal agreements must
somehow mimic the function of contracts for participants to cooperate. This can be achieved with
threats and violence, but overt violence may be counterproductive in the long run because it draws
attention from law enforcement (Decker & Chapman, 2008; Zaitch, 2005).
The economic sociological perspective on valuation, competition, and cooperation combines an
appreciation of economic efficiency, on the one hand, and social relations, on the other. This is
broadly consistent with the reality of co-offending in illicit drug distribution. Offenders make
choices between alternatives and apply planning, strategic thinking, and sequential decision-
making (Cornish & Clarke, 2002)1 but are limited by their lack of information. The purpose of this
article is to combine the economic and criminological research on drug markets through the lens of
social embeddedness theory (Granovetter, 1985). The aim is to identify commonalities and draw
these two traditions closer together, thereby building on the reviews of Ritter (2006) and Bushway
and Reuter (2008) on the disciplinary issues separating economic and criminological research on
drug markets. I use criminology with reference to the sociological and anthropological traditions but
recognize that more interdisciplinary conceptions also include disciplines like economics in the
study of crime and control. In the following section, I go into more detail on the problems with
valuation, competition, and cooperation (Beckert & Wehinger, 2013) as seen from the transaction
costs economic framework. Next, I elaborate by including economic sociological research on similar
issues in legal markets and discuss how they pertain to the criminological research on illicit drug
markets.
Transaction Cost Economics Perspective on Illicit Drug Distribution
The point of departure for understanding the economic perspective is neoclassic economics.
Here, illicit drugs are seen as a good like any other. Illegal transactions are not some special category
of deviance, but, rather, a reaction to prices and incentives under competition (Becker & Murphy,
1988; Lahaie, Janssen, & Cadet-Taı¨rou, 2015; Mocan & Corman, 1998). Neoclassic economic
research is often criticized for working with unrealistic assumptions of perfect information, isolated
transactions,...