The Dark Net has changed the way drugs are traded globally by shifting trade away from the streets and onto the web. In this paper, author studies whether the shutdown of Dark Net marketplaces has an impact on the amount of drugs traded in the streets and on crimes that are normally associated to street drug dealing.
To identify a causal effect, author uses daily data from the US and exploits unexpected shutdowns of large online drug trading platforms. In a regression discontinuity design, author compares crime levels in days after the shutdowns to those immediately preceding them.
Author finds that shutting down Dark Net marketplaces leads to a significant increase in drug trade in the streets. However, the effect is short-lived. In the days immediately following shutdowns, marijuana-related crimes increase by around five percent but revert to pre-shutdown levels within eighteen days.
Author finds no impact of shutdowns of Dark Net marketplaces on thefts, assaults, homicides and prostitution.
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