Using the case of the cocaine trade in Mexico as a relevant and salient example, this paper shows that scarcity leads to violence in markets without third party enforcement. We construct a model in which supply shortages increase total revenue when demand is inelastic. If property rights over...

This paper explores if scarcity increases violence in markets without a centralized authority. We construct a model in which, by raising prices and revenues, temporal supply shortages foster violence. Guided by our model, we examine empirically the link between scarcity and violence in the...

Using the case of the cocaine trade in Mexico as a relevant and salient example, this paper shows that scarcity leads to violence in markets without third party enforcement. We construct a model in which supply shortages increase total revenue when demand is inelastic. If property rights over...