Dark Web Drug Markets and Cartel Crime

Recent evidence suggests that legal marijuana markets in several U.S. states have decreased violence in Mexican-U.S. border regions. As legal markets for production and distribution displace drug cartel distribution, the violence associated with cartel trafficking and distribution decreases. Prior analysis has not considered an important emerging innovation for drug distribution: online anonymous marketplaces. The increasing volume of drug trade that has occurred on this “Dark Web” could result in reduced drug cartel violence as production and distribution use this substitute network and turn away from the cartel distribution networks. This paper investigates the relationship between border violence and the volume of drug trade that occurs on the Dark Web using a difference in differences model. We examine differences in crime rates at the U.S.-Mexico border and away from the border during the emergence of the Dark Web. Data on Dark Web transactions, users, and markets allows us to measure changes in Dark Web activity and the subsequent impact on crime. We find evidence that the rise in Dark Web marketplaces results in crime reductions at the border of the U.S., relative to non-border counties.