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Home | Events Archive | Market Structure and Extortion: Evidence from 50,000 Extortion Payments
Seminar

Market Structure and Extortion: Evidence from 50,000 Extortion Payments


  • Series
  • Speaker(s)
    Micaela Sviatschi (Princeton University, Unites States)
  • Field
    Empirical Microeconomics
  • Location
    Online
    Online
  • Date and time

    October 18, 2021
    16:00 - 17:00

How do gangs compete for extortion? Using detailed data on individual extortion payments to gangs and sales from a leading wholesale distributor of consumer goods and pharmaceuticals in El Salvador, we document evidence on the determinants of extortion payments, firm responses to extortion, and effects on consumers. We exploit a 2016 non-aggression pact between gangs to examine how collusion affects extortion in areas where gangs previously competed. While the non-aggression pact led to a large reduction in violence, we find that it increased extortion by 15% to 20%. Much of the increase in extortion was passed-through to retailers and consumers: we find a large increase in prices for pharmaceutical drugs and a corresponding increase in hospital visits for chronic illnesses. The results shed light on how extortion rates are set and point to an unintended consequence of policies that reduce competition between criminal organizations.

Micaela Sviatschi is an Assistant Professor of Economics at Princeton University since 2018. She works on labor and development economics, with a particular focus on human capital, gender-violence and crime. Her research has been published in the Economic Journal, Journal of Development Economics, among others.

Some information about seminar/bilateral registration and instructions:

  • If you want to attend this online seminar, you should register here. You will then be sent by email the details of the zoom session.
  • Your microphone will be on mute upon joining the meeting, please leave it like that and unmute it only if you want to ask a question.
  • Asking questions: please just go ahead and ask questions in the “usual way” (i.e. do not use the chat unless you want to notify me/host of any problem related to seminar.)
  • Also use the registration form to sign up for a bilateral on Monday (by Thursday 14 October at the latest).