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Why Gun Traffickers Should Live in Arizona

A new study by Brian Knight, an economist at Brown, explores the flow of illegal firearms in America and compares the source of guns used in crimes to gun laws in and around that state.
How big is the market for illegal firearms? Pretty big. Knight writes: “ATF investigations into tracking between July 1996 and December 1998 identify over 84,000 firearms that were diverted into this secondary market (ATF, 2000).” Meanwhile, each state in America legislates its own gun laws, resulting in cross-state externalities. For example, Knight cites anecdotal evidence showing that a gun purchased legally in Virginia for $150 – $200 typically resells in New York City for $500 – $600. This is the sort of thing that keeps Michael Bloomberg up at night.
Here’s the abstract:

This paper provides a theoretical and empirical analysis of cross-state externalities associated with gun regulations in the context of the gun trafficking market. Using gun tracing data, which identify the source state for crime guns recovered in destination states, we find that firearms in this market tend to flow from states with weak gun laws to states with strict gun laws, satisfying a necessary condition for the existence of cross-state externalities in the theoretical model. We also find an important role for transportation costs in this market, with gun flows more significant between nearby states; this finding suggests that externalities are spatial in nature. Finally, we present evidence that criminal possession of guns is higher in states exposed to weak gun laws in nearby states.

Knight found that:

About one-third of guns used in crimes come from out of state. There is a spatial aspect to the flow of illegal guns, of course, and a state with tough gun laws next to a state with weak ones is much more likely to have a higher supply of illegal firearms. So it would be ideal for gun runners to live in states like Virginia, Arizona and Missouri, unless of course we’re talking about Jax Teller in Charming, California.