The Logic of Violence in Drug War

Abstract

Drug traffickers sometimes share profits peacefully. Other times they fight. We propose a model to investigate this variation, focusing on the role of the state. Seizing illegal goods can paradoxically increase traffickers’ profits, and higher profits fuel violence. Killing kingpins makes crime bosses short-sighted, also fueling conflict. Only by targeting the most violent traffickers can the state reduce violence without increasing supply. These results help explain empirical patterns of violence in drug war, which is less studied than are interstate or civil war but often as deadly.

Property rights’ emergence in illicit drug markets

“…Our simpler model allows us to study the cooperative behavior using the mechanism design approach . That way, we are not only able to establish that the peaceful arrangement is a subgame-perfect Nash equilibrium, as in Castillo (2013) and Castillo and Kronick (2020), but also that it is the best equilibrium for the game designer (in our case, the prison gang).…”

“…As in Burrus (1999), the prize from the conflict in our model is the control over retail drug markets while Castillo (2013) and Castillo and Kronick (2020) model disputes over the control of smuggling routes. The first approach fits well drug-consumer countries like USA and Brazil (our motivating case described in subsection “Empirical motivation”), while the latter seeks to model drug-producer countries like Colombia.…”

“…In studying how participants in the illicit markets can collude to sustain a peaceful equilibrium inside the Economics of Conflict ’s framework, we are closely related to Castillo (2013) and Castillo and Kronick (2020). Cooperative behavior among drug dealers are justified in these works by resorting to the combination of high level of patience and infinite horizon.…”

Profits and Violence in Illegal Markets: Evidence from Venezuela

“…Uncertainty about Colombian policy or Venezuelan government responses might have led traffickers to expect that the boom would be short-lived. And relative to, say, the Mexican trafficking industry in the 1990s, the Venezuelan business was much more fragmented; fragmentation generally hampers peaceful pacts among traffickers (Castillo and Kronick Forthcoming). I consider these and other potential mechanisms in the Discussion section.…”

“…Part of the answer is well understood. Violence generally rises with the number of competing traffickers (Castillo and Kronick Forthcoming;Calderón et al 2015Calderón et al , 1472 and with unconditional government crackdowns (Lessing 2018).…”