Economic analysis of drug transaction ‘cycles' described by incarcerated UK drug dealers

The fundamental activity of most drug dealers is buying drugs from a supplier and selling them on, usually in smaller lot sizes to multiple customers at a lower market level. Data on such ‘cycles’ of purchase and resale are derived from interviews with 65 dealers incarcerated in UK prisons. A power function relationship between price and transaction size is confirmed. Analyses reveal great consistency in proportional price markups across drugs and time, high cycle frequencies (typically weekly or more often) and importers who vertically integrate into the highest level of domestic distribution, so that an important share of their net revenues effectively derives from domestic distribution inside the UK, as opposed to importation per se.