Persistent Duopolies of Violence: How the State Gets Drug Gangs to Govern for It

• In Event: Mini-Conference on Democracy and Organized Crime: Crime-State Symbiosis: New Theories and Evidence

Abstract

Armed criminal governance over civilians is common, persistent, and concentrated
in urban zones within easy reach of state forces. If states strive to establish monopolies
on the legitimate use of force, why do such duopolies of violence persist for
decades? Might states prefer duopoly? Typical “Market for Protection” models offer limited traction: theoretically, they assume competing providers of protection would prefer monopoly; empirically, drug-retailing gangs often govern without charging any protection fees or taxes at all. Instead, I develop a public-goods model where state and criminal governance overlap and each stands to benefit the other actor. I compare a baseline model of (monopolistic) stationary banditry (McGuire and Olson, 1996) with a modified version that includes a second bandit—the gang—in terms of the state’s utility, social welfare (if different), and total governance. All three can be higher under criminal duopoly than
under Weberian monopoly iff gangs’ relative costs of governance-provision are lower. I then add a retail drug market in which gang governance (and taxation) affect drug profits by winning (or losing) residents’ loyalty. Here, the state may prefer duopoly even under equal costs of governance. State repression of retail trafficking can incentivize gangs to cut taxes and channel illicit profits into governance, indirectly benefiting the state enough that it prefers duopoly even though more drugs are trafficked than under monopoly. This requires the “pain” of drug trafficking to the state be neither too high (so that it monopolizes), nor too small (so that it de facto decriminalizes drugs and gangs lose the incentive to govern). If the state moves first, though, it might fight a drug war it cares nothing about merely to get the gang to govern for it.

Author

• Benjamin Lessing, University of Chicago