Modeling the U.S. Firearms Market: The Effects of Civilian Stocks, Crime, Legislation, and Armed Conflict

Abstract:

This study represents an attempt to understand the U.S. firearms market – the largest in the world – in economic terms. A model of the underlying interplay of legal firearms supply and demand is a prerequisite for reliably evaluating the effectiveness of pertinent existing state and federal firearms policies, and to amend them as necessary. The stakes are high: compared to other nation-states, per capita firearms-related harm in the United States (including suicides and homicides) is exceptionally high and, within constitutional strictures, state and federal firearms policymakers increasingly view it as a major and pressing society-wide problem. Virtually all firearms in the U.S. are initially manufactured and sold legally. Solving a simultaneous equation model using the instrumental variable of natural disasters and employing a unique dataset of U.S. firearms prices and quantities, this paper models – we believe for the first time in the literature – the U.S. market supply of, and demand for, firearms. Encouragingly, we find that this market operates as any other would be expected to, with the notable exception that lagged nonmilitary firearms stocks generate new market demand in a positive feedback loop. We test as predictors of market performance federal firearms legislation as instances of policy, as well as of extraterritorial armed conflict, firearms industry concentration, crime, and technology gaps between U.S. and imported firearms. Except for the time-limited Federal Assault Weapons Ban (1994-2004), we find (restrictive) firearms legislation not to influence sales. We also find that acute external violent conflict and certain levels of violent crime, including homicides and mass shootings, drive up unit sales, and that higher industry concentrations in certain submarkets boost quantity supplied, suggesting economies of scale. Taken together, this study’s findings may provide some empirical support for firearms stock reduction programs to reduce the total volumes of civilian arms.

JEL Classification Codes: C36, D40, L11, L64.

Key Words: Firearms, small arms, market model, United States.

 

Authors:

Topher L. McDougal, PhD

Associate Professor of Economic Development

Joan B. Kroc School of Peace Studies, University of San Diego, U.S.A.

 

Daniel Montolio, PhD

Professor of Economics

University of Barcelona, Spain

 

Jurgen Brauer, PhD

Visiting Professor of Economics, EBA Program, Faculty of Economics

Chulalongkorn University, Bangkok, Thailand

Emeritus Professor of Economics, Hull College of Business

Augusta University, Augusta, GA, U.S.A.

 

SADO WPS McDougal Montolio Brauer – National Model

Illicit Small Arms Prices – Countries Dataset: Codebook v.2017-01

Abstract:

This codebook documents variables in a dataset described in Marsh, McDougal, Khan, and Lison (2017) as the “Illicit Small Arms Prices—Countries” (iSAP-C) dataset. The dataset is one of two (the other being the “Illicit Small Arms Prices—Transactions”, or iSAP-T, dataset, documented in SADO Working Paper 201604-02) to come out of a joint effort of the Norwegian Initiative on Small Arms Transfers (NISAT) and the Small Arms Data Observatory (SADO). The iSAP-T has an observational unit of arm(s) sold in a single transaction, whilst the iSAP-C, which derives from the iSAP-T, has the more standard country-year observational unit.

Authors:

NICHOLAS MARSH
Peace Research Institute Oslo

TOPHER L. MCDOUGAL
Kroc School of Peace Studies, University of San Diego

ISHTIAQ AHMED KHAN

JORGE LISON

Additional files:
SADO-WPS_201701_02_iSAP-C (CVS) (country-year dataset, CVS format [3 mb])
SADO-WPS_201701_02_iSAP-C (STATA/.dta) (country-year dataset, DTAformat [1 mb])

SADO-WPS_201701_03_iSAP-C-Codebook (country-year dataset codebook, PDF [304 kb])

Illicit Small Arms Prices – Transactions Dataset: Codebook v.2017-01

Abstract:

This codebook documents variables in a dataset described in Marsh, McDougal, and Khan (2017) as the “Illicit Small Arms Prices—Transactions” dataset (iSAP-T). The dataset is one of two (the other being the “Illicit Small Arms Prices—Countries”, or iSAP-C, dataset, documented in SADO Working Paper 201604-03) to come out of a joint effort of the Norwegian Initiative on Small Arms Transfers (NISAT) and the Small Arms Data Observatory (SADO). The iSAP-T has an observational unit of arm(s) sold in a single transaction, whilst the iSAP-C, which derives from the iSAP-T, has the more standard country-year observational unit. The iSAP-T has the advantage that its observations are all directly reported and documented; the data presented is gathered entirely on the basis of verifiable observation.

Authors:

NICHOLAS MARSH
Peace Research Institute Oslo

TOPHER L. MCDOUGAL
Kroc School of Peace Studies, University of San Diego

ISHTIAQ AHMED KHAN

JORGE LISON

Additional files:
SADO-WPS_201701_02_iSAP-T (CVS) (transactions dataset, CVS format [14 mb])
SADO-WPS_201701_02_iSAP-T (STATA/.dta) (transactions dataset, DTA format [1 mb])

SADO-WPS_201701_02_iSAP-T-Codebook (transactions dataset codebook, PDF format [272 kb])

Illicit Small Arms Prices: Introducing Two New Datasets

Abstract:

Despite calls to reduce illicit arms flows, it remains difficult to detect and quantify them. One
proposed method for detecting and quantifying illicit trade volumes is to test econometrically for
price changes. This paper documents an effort of the Norwegian Initiative on Small Arms
Transfers (NISAT) and the Small Arms Data Observatory (SADO) to make such inferential
econometric analyses possible by assembling two new datasets on illicit small arms prices. The
first, called the illicit small arms trafficking transactions dataset (iSAT-T), has an observational
unit of arm(s) sold in a single transaction. The second, called the illicit small arms trafficking
country dataset (or iSAT-C), derives from the iSAT-T and has the more standard country-year
observational unit. This paper describes the methods for data collection, organization, and
generation for these datasets, presents some descriptive statistics and graphics, and concludes
with a discussion of possible future uses and limitations of the datasets.

Authors:

NICHOLAS MARSH
Peace Research Institute Oslo

TOPHER L. MCDOUGAL
Kroc School of Peace Studies, University of San Diego

Additional files:
SADO-WPS_201701_02_iSAP-T-Codebook (transactions dataset codebook)
SADO-WPS_201701_02_iSAP-T (CVS) (transactions dataset, CVS format [14 mb])
SADO-WPS_201701_02_iSAP-T (STATA/.dta) (transactions dataset, DTA format [1 mb])

SADO-WPS_201701_03_iSAP-C-Codebook (country-year dataset codebook)
SADO-WPS_201701_02_iSAP-C (CVS) (country-year dataset, CVS format [3 mb])
SADO-WPS_201701_02_iSAP-C (STATA/.dta) (country-year dataset, DTAformat [1 mb])

SADO-WPS_201701-01_iSAP-datasets (working paper, PDF [1 mb])

Estimating the Size of the Illicit Small Arms Economy in San Diego

Abstract:

Illicit economies are notoriously difficult to detect and quantify for the simple reason that participants have incentives to keep their activities clandestine. This paper outlines and implements a method for estimating the markets for illicit small arms, sex, and drugs as constituent components of the total cash economy for the San Diego metropolitan area. The method has two parts: first it derives the total cash economy of San Diego; second it fits a model predicting that amount for each available year as a function of index variables for three distinct illicit markets (small arms, sex, and drugs) and the licit cash economy. It estimates that the market for cash-based purchases of small arms in San Diego in 2013 was $920 million – slightly larger than the illicit sex industry, and much smaller than both the market for illicit drugs and the licit cash economy. Limitations of the method are discussed, including the potential for better proxy variables to improve reliability.

Abstract:

TOPHER L. MCDOUGAL
Kroc School of Peace Studies, University of San Diego

SADO-WPS_SD-SALW-size_McDougal