What the price data tell us about heroin flows across Europe

Abstract

Using data from the World Drug Reports on wholesale prices for heroin for 17 European countries over the period 2000–2008, patterns of heroin flows across Europe are constructed. For any pair of countries, heroin markets are inferred to be linked if the heroin price correlations exceed a threshold that is determined by calibration to sparsely available anecdotal information on these flows. For any pair of linked markets, heroin is inferred to flow from the country with the lower price to the country with the higher price. The results demonstrate that heroin flows from the Southeastern part of Europe to points north and west. They also suggest that heroin markets are not as well integrated as cocaine markets. This methodology can be used to identify hitherto unnoticed transnational linkages between heroin markets.