Are Underground Markets Really More Violent? Evidence from Early 20th Century America

Emily Owens

American Law and Economics Review, 2011, vol. 13, issue 1, 1-44

Abstract: The violent nature of illegal markets is one rationale for legalizing the sale of narcotics. High U.S. crime rates during the 1920s are regularly presented as evidence of the strong positive relationship between market illegality and violence. The author tests this theory by exploiting state-level variation in homicides and in the passage and repeal of temperance laws before and after Federal Prohibition. Support for the "wet" cause was positively associated with homicides in dry states. However, on average, murder rates did not increase when alcohol markets were criminalized. Observed crime trends during the early 20th century are primarily explained by demographic changes. Copyright 2011, Oxford University Press.

Date: 2011
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