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Violence and black markets: Evidence from the Niger Delta conflict

Author

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  • Rexer, Jonah Matthew
  • Hvinden, Even Soltvedt

Abstract

Illicit markets for natural resources thrive in many post-conflict settings. We propose that weak states may tacitly allow illicit resource markets as a rent-sharing mechanism with violent non-state groups. Using original data on the locations, attacks, and black-market activities of militant commanders in the Niger Delta oil conflict, we show that a 2009 amnesty agreement led to sustained declines in militant activity, but substantial growth in oil theft. Using a no-commitment conflict bargaining model, we show that deterring resource theft is costly for a government facing powerful rebels in locations with low costs of illicit activity, so the state may prefer to tacitly allow resource theft. We find that post-conflict oil theft is elevated and government enforcement against black markets is muted in these areas. Our analysis highlights how local economic conditions and relative military capabilities of state and non-state actors jointly shape incentives for resource theft.

Suggested Citation

  • Rexer, Jonah Matthew & Hvinden, Even Soltvedt, 2026. "Violence and black markets: Evidence from the Niger Delta conflict," Journal of Development Economics, Elsevier, vol. 182(C).
    • Handle: RePEc:eee:deveco:v:182:y:2026:i:c:s0304387826000489
    DOI: 10.1016/j.jdeveco.2026.103765
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    Keywords

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    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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