1995). Retail gun stores sell both new and secondhand firearms and, in this regard, resemble automobile sales lots. FFLs are required to ask for identification from all prospective gun buyers and to have them sign a form indicating that they are not prohibited from acquiring a firearm; the FFL must also initiate a criminal history background check of all would-be purchasers. FFLs are also required to maintain records of all firearms transactions, report multiple sales and stolen firearms to the Bureau of Alcohol, Tobacco, and Firearms (BATF), provide transaction records upon request to BATF; when they go out of business, they are required to transfer their records to BATF.

A privately owned gun can be transferred in a wide variety of ways not involving FFLs, such as through classified ads in newspapers, gun magazines, and at gun shows (which include both licensed and unlicensed dealers). Transfers of secondhand firearms by unlicensed individuals form the secondary market, for which federal law does not require transaction records or criminal background checks of prospective gun buyers (Cook et al., 1995). Using household survey data, Cook and Ludwig (1997) estimate that about 2 million transactions per year (30-40 percent of all gun transactions) occur in the secondary market. Primary and secondary firearms markets are closely linked because many buyers move from one to the other depending on relative prices and other terms of the transaction (Cook and Leitzel, 1996).

Since states vary greatly in their requirements on secondary firearms market transfers (see, e.g., Peters, 2000), another way to think about firearms commerce is to distinguish between regulated and unregulated transfers. In Massachusetts, for example, all firearms transfers must be reported to the state police, and secondary markets can be regulated through inspection of these transfer records (Massachusetts General Laws, Chapter 140). In neighboring New Hampshire, however, sales of guns by private citizens are not recorded, and even legitimate transfers in the secondary market cannot be monitored. In this report we use the primary/secondary distinction because it is standard, but regulation is probably the critical distinguishing feature.

Figure 4-1 presents a conceptual scheme of the flow of firearms to prohibited persons developed by Braga and his colleagues (2002). Through theft, firearms can be diverted to criminals and juveniles at any stage of commerce. Guns can be stolen from manufacturers, importers, distributors, licensed dealers, and private citizens. Cook et al. (1995) estimated that some 500,000 guns are stolen each year. This estimate, derived from National Crime Victimization Survey data for the years 1987 to 1992, suggests that 340,700 thefts occurred annually in which one or more guns were stolen; separate data from North Carolina suggest that on average 1.5 guns are stolen per theft (Cook et al., 1995). This figure is also consistent with a

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