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The Power of the Racketeer: An Empirical Approach

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  • Edwards Griffin Sims

    (University of Alabama at Birmingham, Birmingham, AL, USA)

Abstract

Using a quasi-maximum likelihood Poisson estimator with fixed effects, this paper tests a theory presented in Rubin (1973) that organized criminal firms extract monopoly rents from victim firms that gain monopoly power through the offering of goods and services in a non-native language. Using a US state panel and data on federal racketeering cases charged, I find that all else equal, a 0.1 percentage point increase in the amount of non-English speakers in a state will increase the expected number of racketeering cases per state per year by about 1. This is weakly supported by the fact that states with fewer small businesses, and thus a higher probability of earning monopoly rents, experience less racketeering activity.

Suggested Citation

  • Edwards Griffin Sims, 2014. "The Power of the Racketeer: An Empirical Approach," Review of Law & Economics, De Gruyter, vol. 10(2), pages 1-16, July.
    • Handle: RePEc:bpj:rlecon:v:10:y:2014:i:2:p:16:n:1
    DOI: 10.1515/rle-2013-0012
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    References listed on IDEAS

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