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Gang wars, gang employment and drug prices

  • Aloys Prinz
  • Thomas Ehrmann
Article
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Abstract

The distribution of illegal drugs on local markets is closely related to the phenomenon of gang wars. In a simple model of a local monopoly gang it is studied how the simultaneous decision on the number of low-rank gang members and the local retail market drug prices may affect gang wars. The drug distribution technology is described by a concave production function that contains low-rank gang members as a production factor. One key factor is added to a simple model of such a monopoly retail market for drugs: there is a gang membership benefit for low-rank members that makes these members cheap workers. This feature implies that increases of the membership value decrease drug prices by expanding the number of low-rank members.

Keywords

Gang wars Illegal drugs Local monopoly Gang reputation Non-pecuniary membership value 

JEL Classification

D21 D42 J46 L11 M21 

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Institute of Public EconomicsUniversity of MuensterMuensterGermany
  2. 2.Institute of Strategic ManagementUniversity of MuensterMuensterGermany

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