Market Structure and Extortion: Evidence from 50,000 Extortion Payments
Zach Y Brown,
Eduardo Montero,
Carlos Schmidt-Padilla
et al.
Abstract:How does gang competition affect extortion? Using detailed data on individual extortion payments to gangs and sales from a leading wholesale distributor of consumer goods and pharmaceuticals in El Salvador, we document evidence on the determinants of extortion payments and the effects of extortion on firms and consumers. We exploit a 2016 nonaggression pact between gangs to examine how collusion affects extortion in areas where gangs previously competed. While the pact led to a large reduction in competition a… Show more
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