Following reforms of the federal firearms licensing system, nearly 70% of the nation’s retail gun dealers active in 1994 dropped out of business by 1998. Dropout dealers supplied one-third of guns recovered and traced by police but were linked to fewer crime guns than were other dealers, most likely because dropouts tended to be lower volume dealers. It is not clear if guns sold by dropouts had a higher probability of being used in crime, but guns supplied by dropouts did not move into criminal channels more quickly.
If federal reforms have reduced the availability of guns to criminals, the effect has probably been more modest than suggested by the overall reduction in dealers. Producing further reductions in the flow of guns to criminals through oversight of gun dealers will require refinement in the identification of problematic gun dealers.