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

Author

Listed:
  • Juan Camilo Castillo

    (Stanford University)

  • Daniel Mejia

    (Universidad de los Andes)

  • Pascual Restrepo

    (Boston University)

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.

Suggested Citation

  • Juan Camilo Castillo & Daniel Mejia & Pascual Restrepo, 2018. "Scarcity without Leviathan: The Violent Effects of Cocaine Supply Shortages in the Mexican Drug War," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-314, Boston University - Department of Economics.
    • Handle: RePEc:bos:iedwpr:dp-314
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    File URL: http://www.bu.edu/econ/files/2019/05/cmr_scarcity_restat_final_45pages_short.pdf
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    More about this item

    Keywords

    War on Drugs; Violence; Illegal Markets; Mexico; Cocaine Trade;
    All these keywords.

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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