Program on Refugees, Forced Displacement, and Humanitarian Responses: “Market Structure and Extortion: Evidence from 50,000 Extortion Payments in El Salvador”

Event time: 
Tuesday, February 22, 2022 - 2:30pm
Location: 
Zoom Session or Room 203, Luce Hall See map
Event description: 

The Program on Refugees, Forced Displacement, and Humanitarian Responses presents Professor María Micaela Sviatschi, Princeton University: 

“Market Structure and Extortion: Evidence from 50,000 Extortion Payments in El Salvador”

Register here:  http://tinyurl.com/Market-Structure-Extortion-SV

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, Professor María Micaela Sviatschi and her co-authors document evidence on the determinants of extortion payments and the effects of extortion on firms and consumers. They 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 competition and violence, they find that it increased extortion rates by 15% to 20%. Much of the increase in extortion rates was passed-through to retailers and consumers: retailers experienced an increase in delivery fees leading to an increase in consumer prices. In particular, they find an increase in prices for pharmaceutical drugs and a corresponding increase in hospital visits for chronic illnesses. The results point to an unintended consequence of policies that reduce competition between criminal organizations.

Participants can join in virtually or attend room 203, Luce Hall.

Admission: 
Free but register in advance
Open to: 
General Public