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Scarcity without Leviathan: The Violent Effects of Cocaine Supply Shortages in the Mexican Drug War

Juan Castillo (), Daniel Mejia () and Pascual Restrepo ()
Additional contact information
Juan Castillo: Stanford University
Daniel Mejia: Universidad de los Andes

No dp-314, Boston University - Department of Economics - The Institute for Economic Development Working Papers Series from Boston University - Department of Economics

Abstract: This paper asks whether scarcity increases violence in markets that lack a centralized authority. We construct a model in which, by raising prices, scarcity fosters violence. Guided by our model, we examine the link between scarcity and violence in the Mexican cocaine trade. At a monthly frequency, scarcity created by cocaine seizures in Colombia—Mexico’s main cocaine supplier—increases violence in Mexico. The effects are larger in municipalities near the US, with multiple cartels, and with strong PAN support. Between 2006 and 2009 the decline in cocaine supply from Colombia could account for 10%-14% of the increase in violence in Mexico.

Keywords: War on Drugs; Violence; Illegal Markets; Mexico; Cocaine Trade (search for similar items in EconPapers)
JEL-codes: D74 K42 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2018-10
New Economics Papers: this item is included in nep-law
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Citations: View citations in EconPapers (4) Track citations by RSS feed

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http://www.bu.edu/econ/files/2019/05/cmr_scarcity_restat_final_45pages_short.pdf

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