Abstract
Some theories predict that profits facilitate peace in illegal markets, while others predict that profits fuel violence. I provide empirical evidence from drug trafficking in Venezuela. Using an original data set, I compare lethal violence trends in counties near a major trafficking route to trends elsewhere, both before and after counternarcotics policy in neighboring Colombia increased the use of Venezuelan transport routes. For thirty years prior to the policy change, lethal violence trends were similar in both groups of municipalities; afterward, outcomes diverged: violence increased more along the trafficking route than elsewhere. Together with qualitative accounts, these findings illuminate the conditions under which profits fuel violence in illegal markets.
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