The Economic Consequences of Criminal Firms
Presented at the 2019 Global Issues in Accounting Conference at Chicago Booth
41 Pages Posted: 5 Sep 2019 Last revised: 14 Sep 2021
Date Written: January 18, 2021
This paper investigates the economic consequences of firms connected to organized crime (criminal firms) and shows that when a criminal firm is eliminated from an industry, the performance of non-criminal competitors significantly increases. We also show that the positive effect on the performance of the non-criminal competitors includes improved efficiency reached after the elimination of the criminal competitor. Overall we provide evidence that criminal firms play a crucial role in hampering competition and shows that the economic costs imposed by organized crime are not exclusively linked to a deterioration of the institutional environment.
Keywords: organized crime, competition, performance, Mafia, corporate connections
JEL Classification: M10, M41, G30
Suggested Citation: Suggested Citation