Working Paper: CEPR ID: DP13933
Authors: Jakub Cerveny; Jan C. van Ours
Abstract: This paper examines prices of cannabis sold over the anonymous internet marketplace AlphaBay. We analyze cannabis prices of 500 listings from about 140 sellers, originating from 18 countries. We find that both listing characteristics and country characteristics matter. Cannabis prices are lower if sold in larger quantities, so there is a clear quantity discount. Cannabis prices increase with perceived quality. Cannabis prices are also higher when the seller is from a country with a higher GDP per capita or higher electricity prices. The internet based cannabis market seems to be characterized by monopolistic competition where many sellers offer differentiated products with quality variation causing a dispersion of cannabis prices and sellers have some control over the cannabis prices.
Keywords: cannabis prices; dark web
JEL Codes: D43; K42
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| quantity offered (D44) | price per gram of cannabis (D41) |
| perceived quality of the strain (L15) | price per gram of cannabis (D41) |
| seller ratings (L81) | price per gram of cannabis (D41) |
| country characteristics (GDP per capita) (O57) | price per gram of cannabis (D41) |
| country characteristics (electricity prices) (L94) | price per gram of cannabis (D41) |
| legal status of cannabis (Z28) | price per gram of cannabis (D41) |