Cover: To How Many Customers Should a Drug Dealer Sell?

To How Many Customers Should a Drug Dealer Sell?

Published 1995

by Jonathan P. Caulkins

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This paper presents a simple economic model of a drug dealer's decision about how many customers to supply. The model relates the number of customers (i.e., the branching factor of the distribution network) to a quantity discount factor describing the extent to which prices are marked up from one distribution level to the next and the ratio of selling costs to product costs. Solving the model allows one to infer characteristics of the domestic distribution network from basic assumptions about individual and market level equilibria.

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