Dark Web Drug Markets and Cartel Crime

Brian Meehan; Nicholas Farmer

doi:10.1515/rle-2022-0069

Article

Dark Web Drug Markets and Cartel Crime

Brian Meehan and Nicholas Farmer

Published/Copyright: September 12, 2023

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From the journal Review of Law & Economics Volume 19 Issue 3

Abstract

Recent evidence suggests that legal marijuana markets in several U.S. states have decreased violence in Mexican-U.S. border regions. As legal markets for production and distribution displace drug cartel distribution, the violence associated with cartel trafficking and distribution decreases. Prior analysis has not considered an important emerging innovation for drug distribution: online anonymous marketplaces. The increasing volume of drug trade that has occurred on this “Dark Web” could result in reduced drug cartel violence as production and distribution use this substitute network and turn away from the cartel distribution networks. This paper investigates the relationship between border violence and the volume of drug trade that occurs on the Dark Web using a difference in differences model. We examine differences in crime rates at the U.S.-Mexico border and away from the border during the emergence of the Dark Web. Data on Dark Web transactions, users, and markets allows us to measure changes in Dark Web activity and the subsequent impact on crime. We find evidence that the rise in Dark Web marketplaces results in crime reductions at the border of the U.S., relative to non-border counties.

Keywords: marijuana legalization; dark web markets; crime

JEL Classification: K42; K40

Corresponding author: Brian Meehan, Berry College, Campbell School of Business, Mount Berry, USA, E-mail: bmeehan@berry.edu

Appendix

Table A1:

Impact of Dark Web markets on total crime per 100,000 (full sample 1990–2017).

	(2)	(2)	(3)	(3)	(4)	(4)
Ln (users)Mexican borderDark Web Era	−359.8^c	−269.2^c
	(60.86)	(63.32)
Ln (users)	−171.5	119.3^b
	(302.4)	(50.72)
Ln (users)Ln (Mexican border distance overall)*	−46.29^c	−35.58^c
	(6.538)	(6.873)
Ln (users)Ln (Mexican border distance local)*	3098.1^c	2724.9^c
	(627.5)	(638.6)
Ln ($$ trade volume)Mexican borderDark Web Era			−383.5^c	−313.9^c
			(72.21)	(75.20)
Ln ($$ trade volume)			201.5^c	76.35^b
			(31.39)	(32.13)
Ln ($$ trade volume) Ln (Mexican border distance overall)*			−30.18^c	−22.75^c
			(4.271)	(4.423)
Ln ($$ trade volume) Ln (Mexican border distance local)*			178.9^c	153.9^c
			(36.68)	(37.68)
# of marketsMexican borderDark Web Era					−879.7^c	−734.6^c
					(167.4)	(173.2)
# of markets					487.9^c	363.0^c
					(65.06)	(68.62)
# of markets Ln (Mexican border distance overall)*					−71.75^c	−55.73^c
					(8.774)	(9.342)
# of markets Ln (Mexican border distance local)*					397.8^c	341.2^c
					(82.57)	(84.36)
Mexican Border	1403.0^c	826.3^c	1404.0^c	826.3^c	1398.5^c	826.3^c
	(218.6)	(143.1)	(218.7)	(143.1)	(218.4)	(143.1)
Dark Web EraMexican border*	−10062.6^c	−9502.6^c	−584.6^a	−850.6^c	−384.5^c	−546.0^c
	(2052.9)	(2084.8)	(335.2)	(319.1)	(87.68)	(103.4)
Dark Web Era	5403.8^a	1352.3^c	341.0*	1292.7^c	54.48^c	−213.2^c
	(3225.8)	(80.35)	(186.3)	(84.06)	(20.93)	(28.68)
Med MJ legal in state	−2301.5^c		−2520.3^c		−2378.3^c
	(880.7)		(892.3)		(864.3)
Rec MJ legal in state	−7175.3^c		−7045.8^c		−7180.2^c
	(2512.4)		(2509.6)		(2506.6)
Rec MJ legalLn (Mexican border distance overall)*	898.4^c		881.8^b		899.9^c
	(345.6)		(345.3)		(344.8)
Med MJ legalLn (Mexican border distance overall)*	235.5^b		265.1^b		247.0^b
	(116.3)		(117.7)		(114.1)
N	83,868	83,868	83,868	83,868	83,868	83,868
R^2 (within)	0.0494	0.0269	0.0495	0.0265	0.0495	0.027

Standard errors clustered by county in parenthesis. Controls for Median Income Per Captia, Poverty Rate, % Hispanic, % Black, and % Male have all been omitted from this table for brevity. ^a p < 0.10, ^b p < 0.05, ^c p < 0.01.

Figure A1:

Dynamic DiD (Border crime trends) coverage indicator 99 %+.

Table A2:

Impact of Dark Web markets on total crime per 100,000 persons (coverage indicator 99 %+).

	(2)	(2)	(3)	(3)	(4)	(4)
Ln (users)Mexican borderDark Web Era	−201.9^c	−171.8^c
	(51.07)	(53.09)
Ln (users)	−419.4	1.366
	(298.4)	(40.15)
Ln (users)ln (Mexican border distance overall)*	−22.60^c	−19.40^c
	(5.379)	(5.306)
Ln (users)ln (Mexican border distance local)*	1869.8^c	1776.2^c
	(517.2)	(528.2)
Ln ($$ trade volume)Mexican borderDark Web Era			−213.6^c	−202.3^c
			(62.55)	(64.66)
Ln ($$ trade volume)			81.78^c	0.347
			(25.64)	(25.33)

Ln ($$ trade volume) Ln (Mexican border distance overall)*			−14.10^c	−12.09^c
			(3.518)	(3.406)
Ln ($$ trade volume) Ln (Mexican order distance local)*			99.73^c	95.84^c
			(31.56)	(32.35)
# of MarketsMexican borderDark Web Era					−541.8^c	−493.6^c
					(148.2)	(153.6)
# of markets					260.1^c	209.1^c
					(53.29)	(52.88)
# of markets Ln (Mexican border distance overall)*					−41.24^c	−34.61^c
					(7.184)	(7.164)
# of markets Ln (Mexican border distance local)*					249.5***	231.5***
					(73.51)	(75.81)
Mexican border	406.3^b	499.9^c	412.1^b	500.0^c	412.0^b	499.9^c
	(190.2)	(133.8)	(190.3)	(133.8)	(190.4)	(133.8)

Dark Web EraMexican border*	−6123.3^c	−6023.8^c	−220.2	−204.0	−208.4^c	−211.3^c
	(1702.8)	(1725.8)	(244.5)	(237.9)	(71.81)	(75.77)
Dark Web Era	6165.9^a	1385.0^c	340.7^a	1289.0^c	35.83	−178.0^c
	(3213.1)	(81.69)	(183.5)	(79.94)	(24.14)	(23.74)
Med MJ legal in state	421.3		234.6		135.2
	(799.8)		(819.4)		(786.9)
Rec MJ legal in state	−2774.2		−2647.3		−3236.3
	(2044.9)		(2043.4)		(2035.6)
Rec MJ legalLn (Mexican border distance)*	327.9		311.1		391.8
	(283.4)		(283.2)		(282.2)
Med MJ legalLn (Mexican border distance overall)*	−80.13		−55.50		−39.13
	(105.0)		(107.5)		(103.2)
N	48,827	48,827	48,827	48,827	48,827	48,827
R^2 (within)	0.0789	0.0609	0.0789	0.0596	0.0796	0.0611

Standard errors clustered by county in parenthesis. Controls for Median Income Per Captia, Poverty Rate, % Hispanic, % Black, and % Male have all been omitted from this table for brevity. ^a p < 0.10, ^b p < 0.05, ^c p < 0.01.

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Received: 2022-11-04

Accepted: 2023-08-04

Published Online: 2023-09-12

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Articles in the same Issue

https://doi.org/10.1515/rle-2022-0069

Keywords for this article

marijuana legalization; dark web markets; crime