Shutdowns of illicit marketplaces on the Dark Web lead to more drugs being traded on the streets. Illicit drug trade crimes for heroin, crack cocaine and marijuana increased from five to ten percentage points in the United States during the two weeks following shutdowns of Dark Web marketplaces.
These are the main findings of new research by Diego Zambiasi, presented at the annual congress of the European Economic Association in August 2020.
Online illicit drug trade has been booming during the last decade, with the fraction of drug users buying drugs online doubling from 2014 to 2017 in the United States (from 7 %to 14%, according the Global Drug Survey). Online illicit drug trade grew thanks to cryptocurrencies and the rise of the Dark Web, a hidden part of the web where illicit drugs markets are hosted. These technological innovations allowed criminals to trade drugs online while being relatively anonymous and untraceable.
What happens when these websites get shut down? Do operators in the illicit drugs market start going back to the streets? Does this also cause an increase in property and violent crimes? The new study – ‘Drugs on the Web, Crime in the Streets’ – answers this question by looking at detailed data about US crime and combining it with information about shutdowns of Dark Web marketplaces.
The researcher compares crimes in days immediately before and after shutdowns of Dark Web marketplaces. Under this research design, the days immediately before shutdowns are considered as a good proxy for what would have happened, in the days immediately after shutdowns, if Dark Web marketplaces had not been shut down. Thanks to this counterfactual it is possible to identify what is the causal impact of online drug trading on offline drug trading and crimes that are usually connected to it.
The study finds that online drug trading is closely connected to street drug trading. The two markets act as substitutes, with trade moving back to the streets when Dark Web marketplaces get shut down. Drug trade, however, quickly moves back online as soon as new Dark Web marketplaces open and gain the trust of buyers and sellers of substances.
What is driving this result are crimes connected with the supply of drugs, such as distribution and transport of illicit substances – an indication that it is harder for drug sellers to gain the trust of buyers after an unexpected shutdown of a Dark Web marketplace.
No impact is found on street crimes that are usually associated to drug trading, such as assaults, thefts, prostitution and homicides. These crimes are normally associated with street drug trade as buyers tend to commit crimes to finance their addiction and drug cartels use violence as a tool for keeping their business going.
These findings show how shutting down Dark Web marketplaces has a relatively short-run impact on street drug trade. But they prove once again how hard it is to fight the drug trade and drug addiction with supply-side policies, as addicts and criminal organizations quickly learn to adapt to these policies and find alternative ways to keep buying and selling drugs.
Contact
Diego Zambiasi
University College Dublin
Twitter: @d_zambiasi
Email: diego.zambiasi@ucdconnect.ie