Fueling Organized Crime: Oil Theft and the Mexican Drug War

• In Event: Violent Democracy in the Global South: Evidence from Mexico

Abstract

Criminal organizations have become a major problem for many governments around the world, which often try to tackle it by implementing repressive policies. We first document how repressive policies can displace criminal activity toward new illegal businesses, and then how such displacement influences the effectiveness of the policy itself. Specifically, we will study the Mexican war on drugs, which according to many observers, pushed Mexican drug cartels toward a new remunerative illegal activity, oil theft. We will examine how oil theft responds to the timing and intensity of the war and which cartels were more active in this new criminal business. On the one hand, incumbents in the drug market may be well-positioned to enter this new illegal sector, thanks to their greater economic and military power. On the other hand, challengers may have the greatest incentives to do so, as they lack a dominant position in the drug sector. Finally, we will look at the impact of this new illegal activity on the degree of competition between criminal groups, and ultimately on the resulting levels of violence.

Authors

• Marco Le Moglie, Catholic University of the Sacred Heart

• Gianmarco Daniele

• Giacomo Battiston, Bocconi University

• Paolo Pinotti, Bocconi University