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.

Additional Metadata
Keywords Cannabis prices, Dark Web
JEL Oligopoly and Other Forms of Market Imperfection (jel D43), Illegal Behavior and the Enforcement of Law (jel K42)
Persistent URL hdl.handle.net/1765/119680
Journal European Economic Review
Citation
Cerveny, J., & van Ours, J.C. (2019). Cannabis prices on the dark web. European Economic Review, 120. Retrieved from http://hdl.handle.net/1765/119680