ESSAYS IN COMPETITION IN THE MEXICAN ECONOMY: FROM TELECOMMUNICATIONS TO HEROIN

Abstract

This collection of essays used different policy shocks to investigate their effects on the Mexican economy. The first chapter evaluates the regional impact of an increase in the availability of telecommunications infrastructure. The government made available part of its public network to new entrants to increase competition in the highly concentrated telecommunications sector. The economy is characterized as a model with regional and sectoral linkages. Differently from existing models, it has an oligopolistic sector to match the telecommunications sector in the Mexican economy. I used the model to determine the effect of the shock in employment, gross domestic product, productivity, and the number of entrants in each region. The base economy was calibrated before the actual policy change using different data sets. This calibration allows me to shock the economy with different policy changes. Overall the exercise in this chapter shows the relationship between a policy change and the regional effects from it.

Chapters two and three examine the relationship between violence and competition for market shares among Drug Trafficking Organizations (known as cartels). The context for these two chapters is the last two decades in Mexico and the United States. Mexico saw an increase in the number of major drug cartels from four to nine, which was accompanied by an increase in drug-related violence. Meanwhile, in the U.S., the demand and supply of legal opioids increased, leading to some people to abuse them. In 2010 the FDA approved the reformulation of one of the most abused opioids, which led some abusers to switch to its illegal counterpart, heroin. I exploit different empirical strategies using within municipality variation. The results from the last two chapters suggest that substantial part of the increase in violence that Mexico experienced in the last fifteen years was due to criminal organizations fighting for market shares of heroin, not only due to changes in government enforcement strategies.