If you are the owner of a large enterprise and are ready to retire, what do you do?  Sell to the highest bidder.  Before selling, do you want to split your firm into competing divisions and sell them off separately?  No, because, that would introduce competition, reduce market power and lower the bids so the sum total is lower than what you would get for the monopoly.  Searle, the drug company, sold itself off to Monsanto as one unit.

Miguel Angel Felix Gallardo, the Godfather of the Mexican illegal drug industry, lived a peaceful life as a rich monopolist.   Then he was caught in 1989 and decided to sell off his business.  In principle, Gallardo should sell off a monopoly just like Searle.  But he did not (see end of article)  The difference is that property rights are well defined in a legal business so Searle belongs to Monsanto.  But Gallardo can’t commit not to sell the same thing twice as property rights are not well-defined.  There is also considerable secrecy so it’s hard to know if the territory you are buying was already sold to someone else before.  And after you’ve sold one bit for a surplus, you have the incentive to sell of another chuck as you ignore the negative impact of this on the first buyer.

The result is that selling illegal drug turf results in a more competitive market than the ex ante ideal.  As the business is illegal anyhow, all the gangs can shoot it out to capture someone else’s territory.  Exactly what’s happening now.