There was some discussion in this thread about the perils of black market drug purchases, especially with regard to quality. If you buy acid, it might not be acid, it might be something else, etc.
My question is, how can this be? Being a black market, the drug market happens outside the bounds of government regulation, so shouldn’t the quality of the products be very high? Isn’t that how the market works?
I mean, what rational actor would harm their own customer base with dangerous substitutes - it seems very short sighted to do so. And surely if someone did sell a harmful alternative to acid then they would find themselves without customers as more responsible merchants took up the market share.
I understand that making drugs illegal is going to drastically inflate the price - sellers should be increasing their price by (chance of conviction per unit) × (average years sentenced) × (their wages for one year) and buying some insurance in case they are arrested before they are liquid enough to float a prison term; it is only rational for them to pass that cost along to the buyer.
But other than those inflated costs, why wouldn’t the drug market function efficiently? Does anyone have any theories?
