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28 Contemp. Drug Probs. 679 (2001)
A New Institutional Economics Approach to the Reliability of Street-Level Drug Transactions

handle is hein.journals/condp28 and id is 691 raw text is: Contemporary Drug Problems 28/Winter 2001 A new institutional economics approach to the reliability of street-level drug transactions BY CHRIS WILKINS One issue that has emerged from the study of the operation of illicit-drug markets is the question of how these markets avoid collapsing into anarchy, as neither drug users nor drug dealers can call on the police and courts to enforce the terms of transactions. Recent advances in economic theory, collectively known as New Institutional Economics (NIE), are used to identify informal market institutions that might help sustain reliable transacting in street- level drug markets. High search costs in street-level drug markets compared with legal markets is identified as an environmental factor that may encourage exchange parties to honor the terms of illicit-drug transactions even though there is no third-party enforcement. High search costs may also account for the high levels of quality fraud reported in illicit-drug markets. KEY WORDS: Street-level drug markets, transactional reliability, search costs, New Institutional Economics, stateless economic systems. AUTHOR'S NOTE: This research was carried out at the Economics Department of the University of Waikato, New Zealand, and completed at the Alcohol & Public Health Research Unit. I would like to acknowledge the assistance of Prof Peter Reuter and Dr. Frank Scrimgeour. © 2002 by Federal Legal Publications, Inc.