Estimating the International Cocaine Market: A Novel Combination of Excess Compensation and Stochastic Frontier Analysis

References

ACIC. 2019. Illicit Drug Data Report 2017–18. www.acic.gov.au/sites/default/files/illicit_drug_data_report_2017-18.pdf?v=1564727746.Search in Google Scholar

Aigner, D. J., C. A. K. Lovell, and P. Schmidt. 1977. “Formulation and Estimation of Stochastic Frontier Production Function Models.” Journal of Econometrics 6: 21–37. https://doi.org/10.1016/0304-4076(77)90052-5.Search in Google Scholar

Alldridge, P. 2008. “Money Laundering and Globalization.” Journal of Law and Society 35 (4): 437–63. https://doi.org/10.1111/j.1467-6478.2008.00446.x.Search in Google Scholar

Atkinson, S. 2019. “Toward Developing Estimates of U.S Imports of Illegal Drugs.” In Paper Presented at the Seventh IMF Statistical Forum on Measuring the Informal Economy, Washington, D.C.Search in Google Scholar

Battese, G. E., and T. J. Coelli. 1995. “A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data.” Empirical Economics 20 (2): 325–32. https://doi.org/10.1007/bf01205442.Search in Google Scholar

Becker, G. S. 1968. “Crime and Punishment: An Economic Approach.” Journal of Political Economy 76 (2): 169–217. https://doi.org/10.1086/259394.Search in Google Scholar

Bernal, H. 2020. “Demand and Supply in the Cocaine Market: An Empirical Study.” Journal of Globalization and Development 11 (1): 1–34. https://doi.org/10.1515/jgd-2018-0047.Search in Google Scholar

BIG. 2021. Basel AML Index 2021: 10th Public Edition – Ranking Money Laundering and Terrorist Financing Risks Around the World. Geneva: International Centre for Asset Recovery, Basel Institute on Governance (BIG).Search in Google Scholar

Boubaker, S., D. T. Do, H. Hammami, and K. C. Ly. 2020. “The Role of Bank Affiliation in Bank Efficiency: A Fuzzy Multi-Objective Data Envelopment Analysis Approach.” Annals of Operations Research 311: 611–39. https://doi.org/10.1007/s10479-020-03817-z.Search in Google Scholar

Boubaker, S., R. Manita, and W. Rouatbi. 2019. “Large Shareholders, Control Contestability and Firm Productive Efficiency.” Annals of Operations Research 296: 591–614. https://doi.org/10.1007/s10479-019-03402-z.Search in Google Scholar

Caulkins, J. P., J. Sussell, B. Kilmer, and A. Kasunic. 2015. “How Much of the Cocaine Market Are We Missing? Insights from Respondent-Driven Sampling in a Mid-sized American City.” Drug and Alcohol Dependence 147: 190–5. https://doi.org/10.1016/j.drugalcdep.2014.11.032.Search in Google Scholar

Charnes, A., W. W. Cooper, and E. Rhodes. 1978. “Measuring the Efficiency of Decision Making Units.” European Journal of Operational Research 2 (6): 429–44. https://doi.org/10.1016/0377-2217(78)90138-8.Search in Google Scholar

Cheng, W.-C., and K.-L. Dao. 2019. “Prevalence of Drugs of Abuse Found in Testing of Illicit Drug Seizures and Urinalysis of Selected Population in Hong Kong.” Forensic Science International 299: 6–16. https://doi.org/10.1016/j.forsciint.2019.03.022.Search in Google Scholar

Clarke, R. 2008. “Narcotics Trafficking in China: Size, Scale, Dynamic and Future Consequences.” Pacific Affairs 81 (1): 73–93. https://doi.org/10.5509/200881173.Search in Google Scholar

Cone, E. J. 1995. “Pharmacokinetics and Pharmacodynamics of Cocaine.” Journal of Analytical Toxicology 19 (6): 459–78. https://doi.org/10.1093/jat/19.6.459.Search in Google Scholar

Cook, P. J. 2007. Paying the Tab: The Costs and Benefits of Alcohol Control. New Jersey: Princeton University Press.Search in Google Scholar

Core, J. E., W. Guay, and D. F. Larcker. 2008. “The Power of the Pen and Executive Compensation.” Journal of Financial Economics 88 (1): 1–25. https://doi.org/10.1016/j.jfineco.2007.05.001.Search in Google Scholar

Core, J. E., R. W. Holthausen, and D. F. Larcker. 1999. “Corporate Governance, Chief Executive Officer Compensation, and Firm Performance.” Journal of Financial Economics 51 (3): 371–406. https://doi.org/10.1016/S0304-405X(98)00058-0.Search in Google Scholar

D’Antuono, S. M. 2018. Combating Money Laundering and Other Forms of Illicit Finance: Regulator and Law Enforcement Perspectives on Reform. Washington: Federal Bureau of Investigation (FBI).Search in Google Scholar

Darke, S., S. Kaye, and L. Topp. 2002. “Cocaine Use in New South Wales, Australia, 1996–2000: 5 Year Monitoring of Trends in Price, Purity, Availability and Use from the Illicit Drug Reporting System.” Drug and Alcohol Dependence 67 (1): 81–8. https://doi.org/10.1016/s0376-8716(02)00019-4.Search in Google Scholar

DEA. 2017. Colombian Cocaine Production Expansion Contributes to Rise in Supply in the United States. Washington: Drug Enforcement Agency (DEA).Search in Google Scholar

Efron, B., and R. J. Tibshirani. 1994. An Introduction to the Bootstrap. New York: CRC Press.10.1201/9780429246593Search in Google Scholar

Eggins, E., L. Hine, A. Higginson, and L. Mazerolle. 2020. The Impact of Arrest and Seizure on Drug Crime and Harms: A Systematic Review. Canberra: Australian Institute of Criminology.10.52922/ti04688Search in Google Scholar

EMCDDA. 2016. 2016 EU Drug Markets Report: In-Depth Analysis. Lisbon: European Monitoring Centre for Drugs and Drug Addiction (EMCDDA).Search in Google Scholar

EMCDDA. 2017. Slovakia: Country Drug Report 2017. Lisbon: European Monitoring Centre for Drugs and Drug Addiction (EMCDDA).Search in Google Scholar

EMCDDA. 2021. EU Drug Markets Report 2021: Trends and Developments. Lisbon: European Monitoring Centre for Drugs and Drug Addiction (EMCDDA).Search in Google Scholar

FATF. 2019. Financial Action Task Force - Thirty Years. Paris: Financial Action Task Force (FATF).Search in Google Scholar

FATF. 2022. Money Laundering from Fentanyl and Synthetic Opioids. Paris: Financial Action Task Force (FATF).Search in Google Scholar

Ferragut, S. 2012. Organized Crime, Illicit Drugs and Money Laundering: The United States and Mexico. London: Chatham House.Search in Google Scholar

Ferris, S. P., M.-Y. Liao, and C. Tamm. 2018. “The Compensation of Busy Directors: An International Analysis.” Research in International Business and Finance 46: 294–312. https://doi.org/10.1016/j.ribaf.2018.04.003.Search in Google Scholar

Finklea, K. (2019). Illicit Drug Flows and Seizures in the United States: What Do We [Not] Know?. Washington: Congressional Research Service, US.Search in Google Scholar

Fox, J. 2015. Applied Regression Analysis and Generalized Linear Models, 3rd ed. Carlifornia: SAGE Publications.Search in Google Scholar

Fukushima, A. R., V. M. Carvalho, D. G. Carvalho, E. Diaz, J. O. W. V. Bustillos, H. d. S. Spinosa, and A. A. Chasin. 2014. “Purity and Adulterant Analysis of Crack Seizures in Brazil.” Forensic Science International 243: 95–8. https://doi.org/10.1016/j.forsciint.2014.05.002.Search in Google Scholar

Galenianos, M., and A. Gavazza. 2017. “A Structural Model of the Retail Market for Illicit Drugs.” The American Economic Review 107 (3): 858–96. https://doi.org/10.1257/aer.20150540.Search in Google Scholar

Gherardy, J. G. 2016. “Ecuador: A Low-Threat Environment for Drug Trafficking.” Master thesis, Monterey: Naval Postgraduate School.Search in Google Scholar

GI-TOC. 2021. Global Organized Crime Index: Slovakia. Geneva: Global Initiative Against Transnational Organized Crime (GIATOC).Search in Google Scholar

Giommoni, L. 2014. “The Retail Value of the Illicit Drug Market in Italy: A Consumption-Based Approach.” Global Crime 15 (1–2): 27–50. https://doi.org/10.1080/17440572.2013.875893.Search in Google Scholar

Greene, W. 2004. “Distinguishing between Heterogeneity and Inefficiency: Stochastic Frontier Analysis of the World Health Organization’s Panel Data on National Health Care Systems.” Health Economics 13 (10): 959–80, https://doi.org/10.1002/hec.938.Search in Google Scholar

Greene, W. H. 2008. “The Econometric Approach to Efficiency Measurement.” In The Measurement of Productive Efficiency and Productivity Growth, edited by H. O. Fried, C. A. K. Lovell, and P. Schmidt, 92–250. Oxford: Oxford University Press.10.1093/acprof:oso/9780195183528.003.0002Search in Google Scholar

Guest, N., S. P. Kothari, and R. Pozen. 2022. “Why Do Large Positive Non-GAAP Earnings Adjustments Predict Abnormally High CEO Pay?” The Accounting Review 97 (6): 297–326, https://doi.org/10.2308/tar-2019-0003.Search in Google Scholar

Guthrie, K., J. Sokolowsky, and K.-M. Wan. 2012. “CEO Compensation and Board Structure Revisited.” The Journal of Finance 67 (3): 1149–68. https://doi.org/10.1111/j.1540-6261.2012.01744.x.Search in Google Scholar

Hailu, K. B., and M. Tanaka. 2015. “A “True” Random Effects Stochastic Frontier Analysis for Technical Efficiency and Heterogeneity: Evidence from Manufacturing Firms in Ethiopia.” Economic Modelling 50: 179–92. https://doi.org/10.1016/j.econmod.2015.06.015.Search in Google Scholar

Hammami, H., T. Ngo, D. Tripe, and D.-T. Vo. 2022. “Ranking with a Euclidean Common Set of Weights in Data Envelopment Analysis: With Application to the Eurozone Banking Sector.” Annals of Operations Research 311: 675–94. https://doi.org/10.1007/s10479-020-03759-6.Search in Google Scholar

Hesse, M., K. R. Thomsen, B. Thylstrup, C. U. Andersen, L. A. Reitzel, M. Worm-Leonhard, and C. Lindholst. 2021. “Purity of Street-Level Cocaine across Denmark from 2006 to 2019: Analysis of Seized Cocaine.” Forensic Science International 329: 111050. https://doi.org/10.1016/j.forsciint.2021.111050.Search in Google Scholar

Ho, T. H., D. T. Nguyen, T. Ngo, and T. D. Le. 2021. “Efficiency in Vietnamese Banking: A Meta-Regression Analysis Approach.” International Journal of Financial Studies 9 (3): 1–15, https://doi.org/10.3390/ijfs9030041.Search in Google Scholar

Hogan, W. P. 1993. Markets for Illicit Drugs. Sydney: University of Sydney.Search in Google Scholar

Horowitz, J. L. 2019. “Bootstrap Methods in Econometrics.” Annual Review of Economics 11 (1): 193–224. https://doi.org/10.1146/annurev-economics-080218-025651.Search in Google Scholar

IDPC. 2012. Drug Policy Guide. London: International Drug Policy Consortium (IDPC).Search in Google Scholar

Jia, Z., Z. Liu, P. Chu, J. M. McGoogan, M. Cong, J. Shi, and L. Lu. 2015. “Tracking the Evolution of Drug Abuse in China, 2003–10: A Retrospective, Self-Controlled Study.” Addiction 110 (S1): 4–10. https://doi.org/10.1111/add.12769.Search in Google Scholar

Johnson, B. D. 2003. “Patterns of Drug Distribution: Implications and Issues.” Substance Use & Misuse 38 (11–13): 1789–806. https://doi.org/10.1081/ja-120024241.Search in Google Scholar

Kilmer, B., J. P. Caulkins, R. L. Pacula, and P. H. Reuter. 2011. “Bringing Perspective to Illicit Markets: Estimating the Size of the U.S. Marijuana Market.” Drug and Alcohol Dependence 119 (1–2): 153–60. https://doi.org/10.1016/j.drugalcdep.2011.08.008.Search in Google Scholar

Kumbhakar, S. C., H.-J. Wang, and A. P. Horncastle. 2015. A Practioner’s Guide to Stochastic Frontier Analysis Using Stata. New York: Cambridge University Press.10.1017/CBO9781139342070Search in Google Scholar

Linton, S. L., D. F. Haley, J. Hunter-Jones, Z. Ross, and H. L. Cooper. 2017. “Social Causation and Neighborhood Selection Underlie Associations of Neighborhood Factors with Illicit Drug-Using Social Networks and Illicit Drug Use Among Adults Relocated from Public Housing.” Social Science & Medicine 185: 81–90. https://doi.org/10.1016/j.socscimed.2017.04.055.Search in Google Scholar

Man, N., A. Chrzanowska, O. Price, R. Bruno, P. M. Dietze, S. A. Sisson, L. Degenhardt, et al.. 2021. “Trends in Cocaine Use, Markets and Harms in Australia, 2003–2019.” Drug and Alcohol Review 40 (6): 946–56. https://doi.org/10.1111/dar.13252.Search in Google Scholar

Meeusen, W., and J. van den Broeck. 1977. “Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error.” International Economic Review 18 (2): 435–44. https://doi.org/10.2307/2525757.Search in Google Scholar

Midgette, G., S. Davenport, J. P. Caulkins, and B. Kilmer. 2019. What America’s Users Spend on Illegal Drugs, 2006–2016. Santa Monica: RAND Corporation.10.7249/RR3140Search in Google Scholar

Ngo, T., T. Le, S. H. Tran, A. Nguyen, and C. Nguyen. 2019. “Sources of the Performance of Manufacturing Firms: Evidence from Vietnam.” Post-Communist Economies 31 (6): 790–804. https://doi.org/10.1080/14631377.2019.1607129.Search in Google Scholar

Ngo, T., and K. W. H. Tsui. 2021. “Estimating the Confidence Intervals for DEA Efficiency Scores of Asia-Pacific Airlines.” Operational Research 22: 3411–34. https://doi.org/10.1007/s12351-021-00667-w.Search in Google Scholar

Nguyen, H.-D., T. Ngo, T. Le, and H. Ho. 2019. “The Role of Knowledge in Sustainable Agriculture: Evidence from Rice Farms’ Technical Efficiency in Hanoi, Vietnam.” Sustainability 11 (9): 2472. https://doi.org/10.3390/su11092472.Search in Google Scholar

Office of National Drug Control Policy. 2012. Drug Availability Estimates in the United States, 2001-2006. Washington: Executive Office of the President.Search in Google Scholar

Olesen, O. B., and N. C. Petersen. 2016. “Stochastic Data Envelopment Analysis – A Review.” European Journal of Operational Research 251 (1): 2–21. https://doi.org/10.1016/j.ejor.2015.07.058.Search in Google Scholar

Palamar, J. J., A. Le, T. H. Carr, and L. B. Cottler. 2021. “Shifts in Drug Seizures in the United States during the COVID-19 Pandemic.” Drug and Alcohol Dependence 221: 108580. https://doi.org/10.1016/j.drugalcdep.2021.108580.Search in Google Scholar

Paoli, L., P. Reuter, and V. Greenfield. 2009. The World Heroin Market: Can Supply Be Cut? Oxford: Oxford University Press.10.1093/acprof:oso/9780195322996.001.0001Search in Google Scholar

Pinto Hidalgo, J. J., and J. A. Silva Centeno. 2023. “Geospatial Intelligence and Artificial Intelligence for Detecting Potential Coca Paste Production Infrastructure in the Border Region of Venezuela and Colombia.” Journal of Applied Security Research 18 (4): 1000–50. https://doi.org/10.1080/19361610.2022.2111184.Search in Google Scholar

Pollack, H. A., and P. Reuter. 2014. “Does Tougher Enforcement Make Drugs More Expensive?” Addiction 109 (12): 1959–66. https://doi.org/10.1111/add.12497.Search in Google Scholar

Preciado Arreola, J. L., A. L. Johnson, X. C. Chen, and H. Morita. 2020. “Estimating Stochastic Production Frontiers: A One-Stage Multivariate Semiparametric Bayesian Concave Regression Method.” European Journal of Operational Research 287 (2): 699–711. https://doi.org/10.1016/j.ejor.2020.01.029.Search in Google Scholar

Reuter, P., and V. Greenfield. 2001. “Measuring Global Drug Markets: How Good Are the Numbers and Why Should We Care about Them?” World Economics 2 (4): 108580.Search in Google Scholar

Reynolds, M. M., and M. Avendano. 2018. “Social Policy Expenditures and Life Expectancy in High-Income Countries.” American Journal of Preventive Medicine 54 (1): 72–9. https://doi.org/10.1016/j.amepre.2017.09.001.Search in Google Scholar

Salisbury, D. S., and C. Fagan. 2013. “Coca and Conservation: Cultivation, Eradication, and Trafficking in the Amazon Borderlands.” Geojournal 78 (1): 41–60. https://doi.org/10.1007/s10708-011-9430-x.Search in Google Scholar

Scott, N., J. P. Caulkins, A. Ritter, C. Quinn, and P. Dietze. 2015. “High‐frequency Drug Purity and Price Series as Tools for Explaining Drug Trends and Harms in Victoria, Australia.” Addiction 110 (1): 120–8. https://doi.org/10.1111/add.12740.Search in Google Scholar

Song, W.-L., and K.-M. Wan. 2019. “Does CEO Compensation Reflect Managerial Ability or Managerial Power? Evidence from the Compensation of Powerful CEOs.” Journal of Corporate Finance 56: 1–14. https://doi.org/10.1016/j.jcorpfin.2018.11.009.Search in Google Scholar

Stevens, A. 2010. Drugs, Crime and Public Health: The Political Economy of Drug Policy, 1 ed. Abingdon: Routledge-Cavendish.Search in Google Scholar

Su, S., C. K. Fairley, L. Mao, N. A. Medland, J. Jing, F. Cheng, and L. Zhang. 2019. “Estimates of the National Trend of Drugs Use during 2000–2030 in China: A Population-Based Mathematical Model.” Addictive Behaviors 93: 65–71. https://doi.org/10.1016/j.addbeh.2019.01.022.Search in Google Scholar

Tiwari, M., and J. Ferrill. 2023. “Evolution of Cannabis Regulations and Their Overlooked Link with Money Laundering: Australia as a Critical Case Study.” Journal of Money Laundering Control 26 (5): 970–88, https://doi.org/10.1108/JMLC-11-2022-0158.Search in Google Scholar

Tsionas, M. G. 2021. “Optimal Combinations of Stochastic Frontier and Data Envelopment Analysis Models.” European Journal of Operational Research 294 (2): 790–800, https://doi.org/10.1016/j.ejor.2021.02.003.Search in Google Scholar

UNODC. 2008. Regional Action Plan to Address the Growing Problem of Illicit Drug Trafficking, Organised Crimes and Drug Abuse in West Africa. https://www.unodc.org/westandcentralafrica/en/ecowasresponseactionplan.html.Search in Google Scholar

UNODC. 2009. World Drug Report 2009. Vienna: United Nations Office on Drugs and Crime (UNODC).Search in Google Scholar

UNODC. 2012. Recommended Methods for the Identification and Analysis of Cocaine in Seized Materials. Vienna: United Nations Office on Drugs and Crime (UNODC).Search in Google Scholar

UNODC. 2015. Drug Money: The Illicit Proceeds of Opiates Trafficked on the Balkan Route. Vienna: United Nations Office on Drugs and Crime (UNODC).Search in Google Scholar

UNODC. 2021. World Drug Report 2021. Vienna: United Nations Office on Drugs and Crime (UNODC).Search in Google Scholar

UNODC. 2022. dataUNODC: Data by Topic. https://dataunodc.un.org/.Search in Google Scholar

van Laar, M., T. Frijns, F. Trautmann, and L. Lombi. 2013. “Sizing the Cannabis Market: A Demand-Side and User-specific Approach in Seven European Countries.” Current Drug Abuse Reviews 6 (2): 152–64. https://doi.org/10.2174/1874473706666131205152835.Search in Google Scholar

Verri, P., C. Rustichelli, A. Ferrari, F. Marchesi, C. Baraldi, M. Licata, D. Vandelli, F. Palazzoli, F. Potì, and E. Silingardi. 2019. “Seizures of Illicit Substances for Personal Use in Two Italian Provinces: Analysis of Trends by Type and Purity from 2008 to 2017.” Substance Abuse Treatment, Prevention, and Policy 14 (1): 41. https://doi.org/10.1186/s13011-019-0229-y.Search in Google Scholar

Wan, W.-Y., D. Weatherburn, G. Wardlaw, V. Sarafidis, and G. Sara. 2016. “Do Drug Seizures Predict Drug-Related Emergency Department Presentations or Arrests for Drug Use and Possession?” International Journal of Drug Policy 27: 74–81. https://doi.org/10.1016/j.drugpo.2015.09.012.Search in Google Scholar

Wilkins, C., K. Bhatta, and S. Casswell. 2002. “A ’demand Side’ Estimate of the Dollar Value of the Cannabis Black Market in New Zealand.” Drug and Alcohol Review 21 (2): 145–51. https://doi.org/10.1080/09595230220139046.Search in Google Scholar

Wilkins, C., J. L. Reilly, M. Pledger, and S. Casswell. 2005. “Estimating the Dollar Value of the Illicit Market for Cannabis in New Zealand.” Drug and Alcohol Review 24 (3): 227–34. https://doi.org/10.1080/09595230500170290.Search in Google Scholar

Williams, C. T., and C. A. Latkin. 2007. “Neighborhood Socioeconomic Status, Personal Network Attributes, and Use of Heroin and Cocaine.” American Journal of Preventive Medicine 32 (6, Supplement): S203–S210. https://doi.org/10.1016/j.amepre.2007.02.006.Search in Google Scholar

World Bank. 2021. World Development Indicators (WDI). Washington: The World Bank.Search in Google Scholar