Organized Crime and Firms: Evidence from Anti-Mafia Enforcement Actions
76 Pages Posted: 23 Sep 2018 Last revised: 1 Feb 2021
Date Written: May 13, 2020
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: Suggested Citation