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

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  • Emily Greene Owens

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.

Suggested Citation

  • Emily Greene Owens, 2011. "Are Underground Markets Really More Violent? Evidence from Early 20th Century America," American Law and Economics Review, Oxford University Press, vol. 13(1), pages 1-44.
  • Handle: RePEc:oup:amlawe:v:13:y:2011:i:1:p:1-44
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    Cited by:

    1. Anderson, D. Mark & Crost, Benjamin & Rees, Daniel I., 2014. "Wet Laws, Drinking Establishments, and Violent Crime," IZA Discussion Papers 8718, Institute for the Study of Labor (IZA).
    2. Bjørnskov, Christian, 2015. "Does economic freedom really kill? On the association between ‘Neoliberal’ policies and homicide rates," European Journal of Political Economy, Elsevier, vol. 37(C), pages 207-219.
    3. Feigenbaum, James J. & Muller, Christopher, 2016. "Lead exposure and violent crime in the early twentieth century," Explorations in Economic History, Elsevier, vol. 62(C), pages 51-86.
    4. repec:aea:aejapp:v:9:y:2017:i:4:p:30-57 is not listed on IDEAS
    5. Mary F. Evans & Eric Helland & Jonathan Klick & Ashwin Patel, 2016. "The Developmental Effect Of State Alcohol Prohibitions At The Turn Of The Twentieth Century," Economic Inquiry, Western Economic Association International, vol. 54(2), pages 762-777, April.
    6. Ariaster B. Chimeli & Rodrigo R. Soares, 2017. "The Use of Violence in Illegal Markets: Evidence from Mahogany Trade in the Brazilian Amazon," American Economic Journal: Applied Economics, American Economic Association, pages 30-57.
    7. Jackson, C. Kirabo & Owens, Emily Greene, 2011. "One for the road: Public transportation, alcohol consumption, and intoxicated driving," Journal of Public Economics, Elsevier, vol. 95(1-2), pages 106-121, February.
    8. Juan Camilo Castillo, Daniel Mejia, and Pascual Restrepo, 2014. "Scarcity without Leviathan: The Violent Effects of Cocaine Supply Shortages in the Mexican Drug War - Working Paper 356," Working Papers 356, Center for Global Development.
    9. Howard Bodenhorn, 2016. "Blind Tigers and Red-Tape Cocktails: Liquor Control and Homicide in Late-Nineteenth-Century South Carolina," NBER Working Papers 22980, National Bureau of Economic Research, Inc.
    10. Livingston, Brendan, 2016. "Murder and the black market: Prohibition's impact on homicide rates in American cities," International Review of Law and Economics, Elsevier, vol. 45(C), pages 33-44.

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