The Rational Racketeer: Pasta Protection in Depression Era Chicago
AbstractThis 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 InfoArticle provided by University of Chicago Press in its journal Journal of Law & Economics.
Volume (Year): 40 (1997)
Issue (Month): 1 (April)
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- 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.
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- 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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