Stationary Bandits in the Streets: Gangs, Illicit Market Fragmentation, and Social Order in Chicago

Abstract: While street gangs are prevalent in many urban areas, their impact on social order has been under-theorized and rarely subject to systematic analysis. Building upon political economic theories of organized violence, this paper highlights the role of fragmentation in gang markets and organizations in driving patterns of predatory violence. When gangs have consolidated control of local markets, they are more likely to promote social order in order to reap the long-term benefits of more robust illicit markets. In contrast, by increasing the potential for competition and hampering the ability to solve principal-agent problems, market and organizational fragmentation make gang members less likely to invest in social order and more likely to prey on residents. Analyzing this theory using fine-grain data from Chicago, the paper finds the fragmentation of gang territory and shocks to the organization of local illicit markets to be associated with higher levels of predatory violence like robbery.