Organized Crime and Firms: Evidence from Anti-Mafia Enforcement Actions
72 Pages Posted: 23 Sep 2018 Last revised: 9 Jan 2020
Date Written: January 8, 2020
We exploit staggered municipality-level anti-mafia enforcement actions over the period 1995–2015 in Italy to study the effect of organized crime on firms. Following anti-mafia 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, particularly subsequent to higher enforcement intensity. 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 accounts of organized crime groups acting as a barrier to entry and affecting economic growth.
Keywords: Organized Crime, Corruption, Competition, Innovation, Money Laundering
JEL Classification: G30, G39, K42
Suggested Citation: Suggested Citation