Galenianos, Manolis; Pacula, Rosalie Liccardo; Persico, … - In: Review of Economic Studies 79, 3, pp. 1239-1269
A search-theoretic model of the retail market for illegal drugs is developed. Trade occurs in bilateral, potentially long-lived matches between sellers and buyers. Buyers incur search costs when experimenting with a new seller. Moral hazard is present because buyers learn purity only after a...
