Violence and black markets: Evidence from the Niger Delta conflict

Working Paper
Published on 2 February 2022


We use original data on the locations of militant commanders, attacks on the petroleum industry, and oil theft to show that a 2009 amnesty concluding the Niger Delta oil conflict led to sustained declines in militant activity and growth in oil theft. To explain post-conflict resource theft, we propose that a state may allow black markets as a tacit rent-sharing mechanism. Using a no-commitment bargaining model, we show that when faced with militarily powerful rebels in locations with low costs of illicit activity, the state prefers to recover some surplus through bribes over paying the cost of credibly deterring black markets. We find that post-conflict oil theft is elevated and government enforcement against black markets is muted in these areas, with heterogeneous effects and nonlinear patterns consistent with the model mechanisms. Our analysis highlights how local economic conditions and relative military capabilities jointly shape incentives for resource theft.


Jonah Rexer

University of Pennsylvania

Even Soltvedt Hvinden

University of Tromsø