Two mechanisms served to control the market: the Mexican government insured that there would be no fighting over possible routes inside Mexico, and the U.S. Coast Guard (with the full cooperation, it should be noted, of the Bahamian government and the de facto help of the Cuban one) insured that Mexico would be the cheapest route for cocaine transshipments into the United States.The above business model collapsed in the 1990s because the U.S. government refused to quietly play its role and went after the Colombian-controlled distribution networks. The U.S. and Colombian governments took down Pablo Escobar in 1993. Soon, three Mexican organizations controlled the drug trade, and succeeded in seizing most of the rents from their Colombian suppliers.
From a great survey of the history and prehistory of the Mexican cartel system over at Borderland Beat. Safe for work, too.