PUB - Publikationen an der Universität Bielefeld

This contribution provides a Genetic Algorithm-based model of the interactions of dealers and police in an illicit open-air drug market. A dealer’s risk of detection is designed as a function of market size, enforcement pressure and the dealer’s individual effort. The aim is to study the dynamics generated by police actions on a drug market if individuals are assumed to be boundedly rather then completely rational. In particular, we analyze under which circumstances the Nash equilibrium will be reached, and investigate the conditions necessary for an extinction of the market. The model indicates that the success of a crackdown crucially depends on the dealers’ minimum level of income from their illegal activities and the maximal possible level of enforcement of the police force. The results also highlight the importance of analyzing transient dynamic behavior rather than focusing only on equilibrium behavior.