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By Jeff Adler

Thinking Outside the Fence: A Game Theoretic Analysis of Unconventional Policies to End the Mexican Drug War . By Jeff Adler. Motivation. Since 2005, more than 10,000 deaths related to the conflict $40 billion in revenue to the Mexican cartels each year

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By Jeff Adler

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  1. Thinking Outside the Fence: A Game Theoretic Analysis of Unconventional Policies to End the Mexican Drug War By Jeff Adler

  2. Motivation • Since 2005, more than 10,000 deaths related to the conflict • $40 billion in revenue to the Mexican cartels each year • Drug use rates have been increasing around the world

  3. Utility Functions • Cartels: • R is revenue of cartels, P is black market premium, u is effect of Mexican policy • Mexico: • United States: • A is number of drug users, D is number of drug related deaths, V is number of drug violence related deaths, and the Greek letters are relative weights of each variable in the utility.

  4. Assumptions • Think of Cournot and Stackelberg Competition • Cournot – simultaneous choice synonymous with fixed preferences • Stackelberg – sequential choices gives first firm the upper hand • Cartels treat US decision as fixed

  5. Entry Game

  6. Entry Game

  7. Legalization Game

  8. Legalization Game

  9. US Utility under Legalization • Think about the US utility again • It’s negative in all variables • Legalization necessarily reduces the revenues, black market premiums, and incentives for violence • Portuguese decriminalization (of all drugs) has shown absolute decreases in the prevalence rates of drug use for the critical 15-24 age group, especially in the 15-19 age group • Drug deaths also down • If Portuguese results hold, the values of the coefficients do not matter, because every variable decreases

  10. Volunteer’s Dilemma

  11. Counter-Arguments • Portuguese decriminalization not legalization • Portuguese results not robust

  12. Sources • Greenwald, Glenn. Drug Decriminalization in Portugal: Lessons for Creating Fair and Successful Drug Policies. Publication. 4 Feb. 2009. CATO Institute. 25 Apr. 2009 <http://www.cato.org/pubs/wtpapers/greenwald_whitepaper.pdf >. • Lauer, Martha. “Mexican Drug Policy: Internal Corruption in an Externalized War.” 26 June 2007. Council on Hemispheric Affairs. 20 Apr. 2009 <http://www.coha.org/2007/06/mexican-drug-policy-internal-corruption-in-an-externalized-war/>

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