Apr 2, 2014

The Violent Effects of Cocaine Supply Shortages in the Mexican Drug War

[In markets lacking third party enforcement]. . . scarcity increases unprotected revenue, meaning that violence increases as there are greater opportunities to prey on others and agents must resort to violence in order to avoid being preyed upon.
That is form this very interesting paper by Juan Camilo CastilloDaniel Mejia, & Pascual Restrepo . The argument is excellent.
The authors explain:
Using high frequency variation in the supply of cocaine generated by exogenous changes in Colombian enforcement, we find that violence increased in Mexico during months with supply shortages resulting from seizures in Colombia.
HT: Daniel Mejia

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