An official website of the United States government
Cryptomarkets—online markets for illegal goods—have revolutionized the illegal drug trade, constituting about 10% of all drug trades and attracting users to a greater variety and more addictive substances than available in offline drug markets. This review introduces the burgeoning area of sociology research on illegal cryptomarkets, particularly in the realm of drug trade. We emphasize the expanding role of illicit online trade and its relevance for understanding broader exchange challenges encountered in all illegal trade settings. Examining the effects of online illegal trade on consumption and supply-side policing, we also discuss the harm and potential benefits of moving drug exchange from offline to online markets. We argue for a network perspective's efficacy in this research domain, emphasizing its relevance in assessing trade and discussion networks, technical innovation, and market evolution and vulnerabilities. Concluding, we outline future research areas, including market culture, failure, and the impact of online illegal trade on stratification.
more »
« less
The Asymmetry of Embeddedness: Illegal Trade Networks and Drug Purchasing Diversity on an Online Illegal Drug Market
Abstract While economic sociology research and theory argue that excessive network embeddedness depresses competition in illegal markets, prior research does not examine how distinct types of embeddedness may have asymmetric effects on the diversity of purchasing behavior—the range of illegal goods that buyers typically purchase. This study considers how network embeddedness can positively or negatively affect drug purchasing diversity in online drug markets by referring buyers to new vendors or “locking” buyers into recurrent trade for the same products. We analyze novel network data on 16,847 illegal drug exchanges between 7205 actors on one online illegal drug market. Consistent with hypothesized network asymmetry, buyers are more likely to purchase a new type of drug when the transaction is part of an indirect network referral. Although histories of exchange increase the overall frequency of drug purchasing, they are associated with decreases in new drug-type purchases. In the aggregate, these processes either contribute to an integrated market where buyers purchase multiple drugs from multiple vendors (in the case of referrals) or a fragmented market characterized by recurrent trade from the same vendors for the same substances (in the case of repeated trade). We discuss the implications of these findings for research on embeddedness, illegal markets, risky exchange, and drug policy.
more »
« less
- Award ID(s):
- 1949037
- PAR ID:
- 10470036
- Publisher / Repository:
- Oxford University Press
- Date Published:
- Journal Name:
- Social Forces
- Volume:
- 102
- Issue:
- 4
- ISSN:
- 0037-7732
- Format(s):
- Medium: X Size: p. 1535-1554
- Size(s):
- p. 1535-1554
- Sponsoring Org:
- National Science Foundation
More Like this
-
-
Abstract Although economic sociology emphasizes the role of social networks for shaping economic action, little research has examined how network governance structures affect prices in the unregulated and high-risk social context of online criminal trade. We consider how overembeddedness—a state of excessive interconnectedness among market actors—arises from endogenous trade relations to shape prices in illegal online markets with aggregate consequences for short-term gross illegal revenue. Drawing on transaction-level data on 16 847 illegal drug transactions over 14 months of trade in a ‘darknet’ drug market, we assess how repeated exchanges and closure in buyer–vendor trade networks nonlinearly influence prices and short-term gross revenue from illegal drug trade. Using a series of panel models, we find that increases in closure and repeated exchange raise prices until a threshold is reached upon which prices and gross monthly revenue begin to decline as networks become overembedded. Findings provide insight into the network determinants of prices and gross monthly revenue in illegal online drug trade and illustrate how network structure shapes prices in criminal markets, even in anonymous trade environments.more » « less
-
null (Ed.)Abstract Can organized illegal activities grow stronger and more advanced in response to legal pressure? In October 2013, the FBI shut down Silk Road, a thriving e-commerce market for illegal drugs. After the shock, market actors adopted a new identity verification method that enabled mass-migration to other markets, and created websites for information distribution that reduced post-shock uncertainties. The outcome was a decentralized market in which actors could operate in “open secrecy” across multiple websites. With verifiable pseudonyms and securely obfuscated real-world identities, actors could publicly discuss, plan, and participate in illegal activities. Threats from police and opportunistic criminals persisted but were no longer crippling concerns as buyers and sellers could reasonably expect that their exchange partners would be available for future business; the illegal market could operate more like a legal one. Drawing on quantitative and qualitative data, the author argues that advances in information technology have expanded the opportunity structure for cooperation and creative problem-solving in the underworld, and therefore that shocks did not hinder but rather stimulate development in digital drug markets. Data, collected in 2013–2017, include nearly one million transactions from three illicit e-commerce markets, three million messages from eight discussion forums, and website traffic from two market-independent websites.more » « less
-
The growing adoption of data analytics platforms and machine learning-based solutions for decision-makers creates a significant demand for datasets, which explains the appearance of data markets. In a well-functioning data market, sellers share data in exchange for money, and buyers pay for datasets that help them solve problems. The market raises sufficient money to compensate sellers and incentivize them to keep sharing datasets. This low-friction matching of sellers and buyers distributes the value of data among participants. But designing online data markets is challenging because they must account for the strategic behavior of participants. In this paper, we introduce techniques to protect data markets from strategic participants, even when the asset traded is data. We combine those techniques into a pricing algorithm specifically designed to trade data. The evaluation includes a user study and extensive simulations. Together, the evaluation demonstrates how participants strategize and the effectiveness of our techniques.more » « less
-
Abstract Scarce and unreliable urban water supply in many countries has caused municipal users to rely on transfers from rural wells via unregulated markets. Assessments of this pervasive water re-allocation institution and its impacts on aquifers, consumer equity and affordability are lacking. We present a rigorous coupled human–natural system analysis of rural-to-urban tanker water market supply and demand in Jordan, a quintessential example of a nation relying heavily on such markets, fed by predominantly illegal water abstractions. Employing a shadow-economic approach validated using multiple data types, we estimate that unregulated water sales exceed government licences 10.7-fold, equalling 27% of the groundwater abstracted above sustainable yields. These markets supply 15% of all drinking water at high prices, account for 52% of all urban water revenue and constrain the public supply system’s ability to recover costs. We project that household reliance on tanker water will grow 2.6-fold by 2050 under population growth and climate change. Our analysis suggests that improving the efficiency and equity of public water supply is needed to ensure water security while avoiding uncontrolled groundwater depletion by growing tanker markets.more » « less
