The Economics of Drug Dealing The Economics of Drug Dealing Subject Equilibrium and Comparative Statics Topic Monopoly Key Words Wholesalers, Distributors, Franchises, Profit, Costs, Revenues News Story Drug distribution is handled much like any franchised business. A central gang acts as the wholesaler.
Individual gangs are the distributors.
They pay a flat franchise fee to the central gang for the right to sell drugs in a particular territory. These expenses can reduce the net profit to small levels, although other gang activities such as extortion can offset this. Thus there is surprisingly little money to be made in drug distribution at the franchise level. Pushers receive barely what they would make flipping burgers. The people who do well are high up in the organization at the central gang level.