Date of Graduation

Spring 5-14-2020

Document Type

Thesis

Degree Name

Master of Science in International and Development Economics (MSIDEC)

College/School

College of Arts and Sciences

Department/Program

Economics

First Advisor

Jesse Anttila-Hughes

Abstract

The role of economic incentives in political armed conflict is well documented, but there is very little evidence on a growing and increasingly globalized form of violence: organized crime. Most existing research focuses on the impact of price shocks on wages and how this affects an individual’s opportunity cost to join an armed group or political movement. However, unlike other violent groups, organized criminal groups do not compete for political power, but profits in illegal markets. In Mexico, these groups have more than doubled in the past two decades, leading to an explosion of violence and record high 35,000 people being murdered in 2019. Mexican cartels engage in rent-seeking behavior in both licit and illicit markets, especially in rural areas where illicit crop cultivation supports the drug trade. In this paper I use a differences-in-differences strategy exploiting variation in avocado and illicit drug prices from 2003-2018 to understand how price shocks to both legal and illegal commodities impact cartel competition in different markets. I find rising avocado prices have a significant effect on violent crime in avocado-growing municipalities at the monthly level. Cartels also are more likely to enter an avocado-growing municipalities as prices increase, and less likely to leave them. Avocados may also be complementary to illicit crop cultivation.

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