What drug dealers tell us about their costs of doing business

Interviews with low-level drug dealers in New York City reveal that the mon etary costs of distributing drugs are modest. Hence, the proportion of sale s revenue retained by these sellers is a meaningful indicator of their earn ings. There are four distinct types of sellers, with systematic differences across types in the proportion of sales revenue retained Entrepreneurs who own the drugs they sell retain the largest share (about 50 percent). Indep endent consignment sellers retain less (about 25 percent). Consignment sell ers who operate within fixed selling locations or "spots" retain still less (10 percent), and the sellers who were paid hourly to sell from spots reta ined the smallest proportion (3 percent). These differences might explain v ariation in reports of sellers' earnings and may have significant implicati ons for the relative ability of enforcement against spots and enforcement a gainst sellers operating outside of spots to drive up drug prices and suppr ess drug use.