Much of the research on illegal markets has focused on drugs, but drug markets don't necessarily look like other illegal markets. School of Public Policy Distinguished University Professor Peter Reuter and his fellow researchers compared a wide range of illegal markets side by side.
The collection appears in the Proceedings of the National Academy of Sciences (PNAS) and examines wildlife trafficking, human smuggling, firearms, money laundering, commercial sex and four other illegal markets. The special feature, supported by a grant from the National Science Foundation, includes studies of nine illegal markets using a common framework.
Drug markets stand out. Compared with other illegal markets, markets for cocaine, heroin and other drugs generate more violence, have stronger connections to organized crime, are more likely to have powerful kingpins and face more intensive enforcement.
Reuter co-edited the collection with Jonathan P. Caulkins of Carnegie Mellon University and Beau Kilmer of RAND. They also co-authored the introduction comparing findings across the markets. In a separate paper with KU Leuven Professor Letizia Paoli, Reuter examined how policies used to control illegal markets differ and how well they work.
University of Maryland researchers Meredith Gore of the Department of Geographical Sciences and Greg Midgette of the Department of Criminology and Criminal Justice also contributed to the special feature. Their paper examines illegal wildlife markets, including the trade in elephant ivory, pangolin scales and succulent plants, and how their characteristics can complicate efforts to control them.
Illegal markets may generate about $1 trillion in revenue worldwide each year, with human, social and environmental costs that can be even greater. Efforts to control them can have different results. With wildlife trafficking, the effects of intercepting elephant ivory can depend on where enforcement takes place, and reducing the amount that reaches buyers doesn't necessarily reduce the harm to wildlife. In 2016, the flow of migrants smuggled into Europe through the Eastern Mediterranean declined after the European Union provided funding to Turkey to support refugees and asylum seekers there.
Some illegal markets are closely connected to legal ones. Money laundering often involves banks and other legitimate financial institutions. Regulations intended to prevent laundering can affect all bank customers, not just people engaged in illegal activity.
Reuter and Paoli found wide differences in how illegal markets are policed and regulated, with enforcement often weak or inconsistent. Drugs are different. Enforcement can be intense without substantially reducing availability and can bring significant unintended consequences.
Reuter and Paoli argue that policymakers need to consider the harms caused by illegal activity as well as those that can result from efforts to control it. Their paper looks at whether the harm reduction approach developed in drug policy could also be useful in other illegal markets. That means weighing the harms of illegal activity against the costs and unintended consequences of efforts to control it.
Many illegal markets remain understudied, including illegal gambling in the United States and loansharking in Asia. “We anticipate that this special issue will be the seed for new streams of research,” said Reuter.