True Crime: Illegal markets have great variety (PNAS)

 The forthcoming issue of PNAS (August 18, 2026 | vol. 123 | no. 33) has a big set of papers on illegal markets, with the goal of searching for common features, which turn out to be somewhat elusive.

Research ArticleAugust 10, 2026

A budding science of illegal markets

Illegal markets create untold societal and environmental harm, but they have attracted surprisingly little scholarly attention. This paper explores illegal markets as a class of objects. It considers similarities and differences across markets, with ...

• Jonathan P. Caulkins

"The raw material for these comparisons mostly comes from the February 2025 Policy and Research on Illegal Markets (PRIM) workshop held at RAND in Santa Monica. The workshop convened 17 experts on nine specific markets, or types of markets. They wrote the market-specific papers contained within this volume."  

Research ArticleAugust 10, 2026

Stability and turbulence in illegal drug markets

This article provides a primer on illegal drug markets, with a focus on the structure and nature of these markets and the enterprises involved. The markets for illegal drugs are large, with annual retail expenditures likely exceeding $100 billion in the ...

• Beau Kilmer
• 
  

IntroductionAugust 10, 2026

Illegal markets: An important domain for applied science

• Jonathan P. Caulkins,
• Beau Kilmer and
• Peter Reuter

"One premise of this special issue is that illegal markets and the supply chains that support them are a worthy topic of scientific inquiry. That turns out to be a novel claim. Illegal markets have simply not been a major topic of interest to economists, the discipline that would most plausibly study them. For example, Nobel laureate Alvin Roth, in his magisterial review of markets and market design, describes illegal markets but offers no specific analytic insights about them (2[A. E. Roth, Marketplaces, markets, and market design. Am. Econ. Rev. 108, 1609–1658 (2018).]). Gary Becker, one of the giants of microeconomics, wrote occasionally about drug markets but forced on them the presumption that they were analytically no different than legal markets (e.g., ref. 3). 

Research ArticleAugust 10, 2026

How illegal wildlife trade adheres to and defies conventional market behavior

Illegal wildlife markets comprise a complex global economy generating criminal profits while harming biodiversity and livelihoods. The negative externalities from biodiversity loss, ecosystem destabilization, and zoonotic disease risk may be orders of ...

• Greg Midgette and
• Meredith L. Gore

"At least since the third century BCE, when the Edicts of Ashoka prohibited the killing of animals with aesthetic value on the Indian subcontinent, wildlife has been trapped, harvested, and sold in contravention of laws (1). " 

PerspectiveAugust 10, 2026

Illegal firearms markets: Transaction patterns, evolving sources, and importance in criminal misuse

In the United States, the legal status of the 30 to 40 million annual firearms transactions is defined by state and federal regulations. These regulations primarily aim to reduce criminal misuse while preserving access for the large majority of adults who ...

• Philip J. Cook and
• Rosanna Smart

"Illegal transactions in firearms are often embedded in the much larger formal and informal markets, simply because sellers cannot easily distinguish between legal and illegal buyers even if they are motivated to do so. As one analogy, illegal firearms transactions look less like the market for heroin, where everyone involved knows the illegality of their transaction, than that for diverted pharmaceuticals." 

PerspectiveAugust 10, 2026

The market for human smuggling: Structure, mechanisms, and paradoxes

Human smuggling is the facilitation of unlawful cross-border movement. It is primarily a commercial activity, offered as a service to willing, paying customers, and a large-scale market catering to millions seeking to circumvent mobility restrictions. ...

• Paolo Campana

"The terms human smuggling and human trafficking are often confused, but they represent two very different phenomena, albeit potentially occurring in the same places and populations. While a victim of trafficking and a genuine client of a smuggler might find themselves shoulder-to-shoulder in the same inflatable boat, thus sharing the same means to cross the same border, smuggling and trafficking remain distinct—both analytically and legally. In the case of smuggling, the service provided is the illegal entry into a country—and a migrant enters into the transaction with a smuggler voluntarily (1). Some may have few options other than to migrate, and in that sense be forced to migrate, but they are not forced into that action by an individual or organization selling them the smuggling service. The relationship between a migrant and a smuggler terminates when the former has reached the agreed destination and paid the latter the agreed sum. On the other hand, the purpose of trafficking is obtaining control over a person for exploitation, including sexual exploitation, labor exploitation, or domestic servitude (2).† Victims of human trafficking may enter a country through legal channels, and in some cases, trafficking takes place wholly within national borders." 

PerspectiveAugust 10, 2026

The money laundering market: An economic analysis

Criminals launder their proceeds from crime, either themselves or by paying a professional, to disguise the link between the criminal, the crime, and the proceeds. This allows the criminal to spend the proceeds more freely and lowers the chance of ...

• Joras Ferwerda

"Since the goal of money laundering is to go unnoticed or to be seen as some other form of legitimate transaction, it is, by nature, difficult to provide credible estimates of how big the problem is. Moreover, the purchase of laundering services is generally a consensual crime: Both parties voluntarily enter into the transaction. Consensual crimes lack a direct victim to report the crime, which means the crime is revealed only when it is actively investigated.
There are a number of estimates of the volume of money laundering. These range in credibility; some lack empirical backup altogether [e.g., the widely quoted International Monetary Fund estimate of 2 to 5% of global GDP (3)]..." 

PerspectiveAugust 10, 2026

Casting light on the workings of illegal fishing markets

About 3.5 million fishing vessels ply the world’s oceans, providing livelihoods and food for millions of people. Sound management is key to fisheries’ sustainability, but illegal fishing, along with fishing overcapacity generally and environmental change, ...

• Philippe Le Billon,
• Zelda Ladefoged and
• U. Rashid Sumaila

 

PerspectiveAugust 10, 2026

Illegal markets for cigarettes and e-cigarettes

This paper discusses the long-standing illegal markets for cigarettes and the more recently emerged illegal markets for e-cigarettes. We identify three distinctive market fundamentals that help explain many features of the illegal markets. First, in ...

• Donald Kenkel and
• Grace Phillips

"In 2024, tobacco products generated almost $1 trillion in revenues, mainly from cigarette sales; e-cigarettes generated $26 billion dollars (1–3). While the share of the illegal markets varies by country, it is estimated that illegal markets account for about 10 percent of global cigarette consumption (4). Second, the illegal markets have arisen to evade high excise taxes that increase prices and regulations that restrict the availability of desirable features of legal products.  "

PerspectiveAugust 10, 2026

The illegal market for sex in the United States: Insights from economic research

The illegal market for sex in the United States generates significant economic activity yet remains understudied due to its illegality and clandestine nature. This paper synthesizes existing empirical evidence documenting aspects of market structure, ...

• Manisha Shah

"Although sex work is often perceived as predominantly occurring in marginalized urban areas or among underprivileged cultural groups, sex work is pervasive at all echelons of society. Media portrayals often emphasize street-based sex work, presenting it as the predominant form of prostitution; however, street-based sex work has been estimated to account for approximately 10 to 15% of total sex work participation (2). In the United States and in many other countries, the majority of the sex market has moved “indoors,” whether that be through massage parlors or brothels and/or online encounters." 

PerspectiveAugust 10, 2026

The policy construction of illegal markets: Exploring variation, success, failure, and unintended consequences

Illegal markets, broadly defined to include markets where only specific transactions are illegal, are the consequence of policy, either a prohibition or highly restrictive regulation. They are generated by a variety of concerns, some moral, some ...

• Letizia Paoli and
• Peter Reuter

"Drugs that are now prohibited were perfectly legal in most countries until the early 20th century. Famously, the British fought two “Opium Wars” with China (1839–1842 and 1856–1858) to open up that nation to opium exports from India (8). Cannabis, the most popular plant-based illegal drug, was cultivated—and also grew wildly—in at least four continents and until the 1920s “the large majority of countries did not have any controls at all” (9). However, the 1961 UN Single Convention on Narcotics Drugs virtually prohibited all production and distribution of many prominent psychoactive substances, including heroin, cocaine, and cannabis; it also prohibited possession. Since then, drug transactions have grown to form what is generally believed to be the largest illegal market globally. For the United States (US), an estimate for 2016, the latest available, was over $150 billion (10)." 

PerspectiveAugust 10, 2026

A descriptive analysis for the markets for counterfeit products

Product counterfeiting is a pervasive crime that involves the unauthorized use of a legitimate trademark, a violation of intellectual property rights. Counterfeiting is also one of many forms of global illicit trade, mirroring legitimate markets in ...

• Jay P. Kennedy

"US Customs and Border Protection reports (2) regarding intellectual property rights violations state that the most commonly seized counterfeit products at US ports of entry in 2024 were handbags/wallets (36% of all seizures), pharmaceuticals (27%), and apparel (7.4%). Other products seized included footwear, automotive parts, health and beauty products, and electronics like cell phones, computers, microprocessors, and circuit boards. While Customs seizure reports give an indication of the types of products identified and interdicted by law enforcement agencies, many more counterfeit products slip past customs agents and enter the market, including items like counterfeit aircraft parts, military equipment, weapons systems components, and even parts for nuclear reactors. "

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Some of these markets are also discussed in my recent book, 

Moral Economics: From Prostitution to Organ Sales, What Controversial Transactions Reveal About How Markets Work