A new study by Brian Knight, an economist at Brown, explores the flow of the illegal firearm market 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: