Competition in the Black Market:Estimating the Causal Effect of Gangs in Chicago

Jesse Bruhn

No 2021-004, Working Papers from Brown University, Department of Economics

Abstract: I study criminal street gangs using new data that describes the geospatial distribution of gang territory in Chicago and its evolution over a 15-year period. Using an event study design, I show that city blocks entered by gangs experience sharp increases in the number of reported batteries (6%), narcotics violations (18.5%), weapons violations (9.8%), incidents of prostitution (51.9%), and criminal trespassing (19.6%). I also find a sharp reduction in the number of reported robberies (-8%). The findings cannot be explained by pre-existing trends in crime, changes in police surveillance, crime displacement, exposure to public housing demolitions, reporting effects, or demographic trends. Taken together, the evidence suggests that gangs cause small increases in violence in highly localized areas as a result of conflict over illegal markets. I also find evidence that gangs cause reductions in median property values (-$8,436.9) and household income (-$1,866.8). Motivated by these findings, I explore the relationship between the industrial organization of the black market and the supply of criminal activity. I find that gangs that are more internally fractured or operate in more competitive environments tend to generate more crime. This finding is inconsistent with simple, market-based models of criminal behavior, suggesting an important role for behavioral factors and social interactions in the production of gang violence.

Date: 2021
New Economics Papers: this item is included in nep-law and nep-ure
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://economics.brown.edu/sites/g/files/dprerj72 ... Paper%202021-004.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bro:econwp:2021-004

Access Statistics for this paper

More papers in Working Papers from Brown University, Department of Economics Department of Economics, Brown University, Providence, RI 02912.
Bibliographic data for series maintained by Brown Economics Webmaster ().