Hidden drivers of violence diffusion: Evidence from illegal oil siphoning in Mexico

This paper studies spatial violence diffusion when criminal organizations specializing in one illegal activity (e.g., drug trafficking) are attacked by security forces. Our theoretical framework suggests that violence diffusion will be linked to criminal diversification. Using the Mexican War on Drugs, we find evidence supporting this prediction. We document that the Mexican War on Drugs induced drug trafficking organizations to begin stealing hydrocarbon products from the Mexican oil pipeline network. In turn, this portfolio reallocation of illegal activities caused violence to escalate in oil pipeline network locations holding little strategic value for drug trafficking. Furthermore, within the pipeline network, branches located further away from the government’s eye were more susceptible to the establishment of criminal monopolies and thus experienced greater upticks in violence than other branches.