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The Rational Racketeer: Pasta Protection in Depression Era Chicago

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Author Info

  • Alexander, Barbara J

Abstract

This study evaluates a Depression Era Chicago pasta racket against predictions generated by alternative economic models assuming varying levels of racketeer control over the industry. Models of an 'all-powerful" racketeer and of a racketeer in an omnipotent alliance with a dominant firm are rejected because the actual protection payments were much lower than those implied by the models. Moreover, the regressive structure of the payments made per macaroni press--a portion of the total racketeer-levied "tax"--was contrary to the models' predictions that the most efficient large-press firms would pay the highest tax rates. In contrast, all of theavailable information on the racket is consistent with a model in which the racketeer acts as a cartel ringmaster whose primary duties are to monitor and control members' output levels. In addition, the regressive tax would block entry by any displaced workers seeking to produce pasta using small, previously mothballed presses. Copyright 1997 by the University of Chicago.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Law & Economics.

Volume (Year): 40 (1997)
Issue (Month): 1 (April)
Pages: 175-202

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Handle: RePEc:ucp:jlawec:v:40:y:1997:i:1:p:175-202

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Web page: http://www.journals.uchicago.edu/JLE/

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Cited by:
  1. Giovanni Mastrobuoni & Eleonora Patacchini, 2010. "Understanding Organized Crime Networks: Evidence Based on Federal Bureau of Narcotics Secret Files on American Mafia," Carlo Alberto Notebooks 152, Collegio Carlo Alberto.
  2. Mikael Priks, 2012. "Competition among officials and the abuse of power," Public Choice, Springer, vol. 150(3), pages 425-438, March.
  3. Anja Shortland & Federico Varese, 2012. "The Business of Pirate Protection," Economics of Security Working Paper Series 75, DIW Berlin, German Institute for Economic Research.
  4. Nuno Garoupa, 1999. "Optimal law enforcement and criminal organization," Economics Working Papers 366, Department of Economics and Business, Universitat Pompeu Fabra.
  5. Lavezzi, Andrea Mario, 2008. "Economic Structure and Vulnerability to Organised Crime: Evidence from Sicily," MPRA Paper 50114, University Library of Munich, Germany.

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