Bushes and Bullets: Illegal Cocaine Markets and Violence in Colombia. Daniel Mej´ ıa and Pascual Restrepo * August 29, 2015 Abstract This paper explores the effects of cocaine booms on violence in Colombia during the period 1990-2011. We exploit within municipality variation obtained by combining a suit- ability index for coca cultivation interacted with a non-monotonic measure of external demand for Colombian cocaine. Our suitability measure is based on a survey of coca farmers, and depends on the altitude, erosion, soil aptitude, and precipitation of a munic- ipality. The measure of external demand combines proxies for consumption in the U.S., and changes in enforcement in transit countries and other source countries that shape the demand for Colombian cocaine. We find that increases in the external demand for Colombian cocaine create cocaine booms in municipalities with a high suitability index. As a consequence, homicides increase significantly both in the short and long run. We argue that the cocaine booms bring violence because this is an illegal commodity. In par- ticular, we find that while cocaine booms bring violence independently of state presence, other commodities’ booms (cocoa, sugar cane and palm oil) typically reduce it, unless institutions are bad enough. Keywords: Violence, Illegal Markets, Organized Crime, Cocaine, Colombia. JEL Classification Numbers: D74, K42. * Mej´ ıa: Universidad de los Andes, e-mail: dmejia@uniandes.edu.co. Restrepo: Corresponding author, Mas- sachusetts Institute of Technology, e-mail: pascual@mit.edu. We thank Daron Acemoglu, Josh Angrist, Adriana Camacho, Camilo Garc´ ıa and Viridiana Rios for their helpful comments. Camilo Garc´ ıa, Ana Mar´ ıa Ib´ a˜ nez, Margarita G´ afaro, Fabio S´ anchez and Juliana Vernaza kindly provided most of the data used in this study. 1