When the Godfather Falls: Implications for Industry Peers

Abstract

This study examines the economic impact of organized crime using 57 anti-Mafia police operations in Northern and Central Italy from 2013 to 2020. Removing Mafia-connected firms increases non-criminal competitors’ performance by 7.7 percent—equivalent to €1.97 billion in additional EBITDA—driven by revenue growth and lower input costs. The effect rises to 15 percent in low-competition industries with entrenched Mafia influence. The impact varies by the criminal firm’s infiltration strategy and organizational role. Firms engaged in rent extraction harm peers more than those focused on money laundering. Additionally, removing firms tied to high-ranking Mafia members or external enablers, such as politicians or professionals, yields larger gains. These findings show how organized crime distorts competition through coercive and institutional channels, even in advanced economies. Disrupting Mafia influence restores fairness and efficiency, offering new insights into how enforcement actions reshape markets and reduce the economic costs of criminal infiltration.

Keywords: Organized Crime, Mafia, Competition, Performance, Corporate Governance