Organized Crime and Firms: Evidence from Anti-Mafia Enforcement Actions

76 Pages Posted: 23 Sep 2018 Last revised: 1 Feb 2021

See all articles by Pablo Slutzky

Pablo Slutzky

University of Maryland - Robert H. Smith School of Business

Stefan Zeume

University of Illinois at Urbana-Champaign

Date Written: May 13, 2020

Abstract

We exploit staggered municipality-level anti-mafia enforcement actions over the 1995–2015 period in Italy to study how the presence of organized crime affects firms. Following enforcement actions, we find increases in competition among firms, innovation activity, and competition for public procurement contracts. Firms that do not exit after a weakening of organized crime shrink in size and experience a reduction in profitability. These results are more pronounced among firms founded during the heyday of the mafia and operating in the non-tradable sector. Our findings are consistent with organized crime acting as a barrier to entry and affecting local economic activity.

Keywords: Organized Crime, Corruption, Competition, Innovation, Money Laundering

JEL Classification: D73, K42, G38, H75

Suggested Citation

Slutzky, Pablo and Zeume, Stefan, Organized Crime and Firms: Evidence from Anti-Mafia Enforcement Actions (May 13, 2020). Available at SSRN: https://ssrn.com/abstract=3242495 or http://dx.doi.org/10.2139/ssrn.3242495

Pablo Slutzky

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

Stefan Zeume (Contact Author)

University of Illinois at Urbana-Champaign ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

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