State Regulation of Organized Crime: Politicians, Police, and Drug Trafficking in Argentina

In many developing countries with weak formal institutions, the protection of state actors is essential for organized criminal activities and illicit markets to emerge and thrive. This article examines the relationship between the state's regulation of drug trafficking and its associated violence in highly fragmented markets. It argues that political competition influences coordination among the police, generating different types of regulatory regimes. Police with greater coordination implement protection rackets that curb violence; uncoordinated police carry out particularistic negotiations with drug traffickers that exacerbate criminal violence. This argument is illustrated with a subnational comparison of two Argentine provinces that experienced a similar drug market expansion with different patterns of violence. These cases show how corrupt states can obtain relative order in highly fragmented drug markets, and illustrate police influence in shaping the evolution of drug dealing in metropolitan areas.