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Resisting the Extortion Racket: an Empirical Analysis

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  • Michele Battisti
  • Andrea Mario Lavezzi
  • Lucio Masserini
  • Monica Pratesi

Abstract

In this paper we study the decision of rms operating in areas where organised crime is pervasive to resist the extortion racket. To this purpose we design a case-control study starting from the unique ex- perience of Addiopizzo (AP), an NGO operating in Palermo (Sicily) which, from 2004, invites rms to resist to the racketeers and join a public list aimed at eliciting critical consumption in favour of rms in the list. We study the determinants of the decision to join AP by estimating a two-level logistic regression model. We nd that rm's total assets and rm's age have a negative effect on the probability of joining AP, while a higher level of human capital embodied in the rm and a higher number of employees increases such probability. Among the district-level variables, we nd that the share of district population reduces the probability to join, while a higher level of socio-economic development, including education levels, increase the probability. We posit that these results support the hypothesis that the decision to join AP is based on a cost-bene t analysis and discuss policy implications of our results.

Suggested Citation

  • Michele Battisti & Andrea Mario Lavezzi & Lucio Masserini & Monica Pratesi, 2015. "Resisting the Extortion Racket: an Empirical Analysis," Discussion Papers 2015/206, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    • Handle: RePEc:pie:dsedps:2015/206
    Note: ISSN 2039-1854
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    Cited by:

    1. Michele Battisti & Andrea Mario Lavezzi & Lucio Masserini & Monica Pratesi, 2018. "Resisting the extortion racket: an empirical analysis," European Journal of Law and Economics, Springer, vol. 46(1), pages 1-37, August.
    2. Alaka Shree Prasad & Biswajit Mandal, 2019. "Time zone difference, skill formation and corrupt informal sector: the role of virtual trade," Indian Economic Review, Springer, vol. 54(2), pages 261-290, December.
    3. Prasad, Alaka Shree & Mandal, Biswajit, 2019. "Virtual trade between different time zones, educational capital and corrupt informal sector," MPRA Paper 96963, University Library of Munich, Germany.
    4. Giovanni Bernardo & Irene Brunetti & Mehmet Pinar & Thanasis Stengos, 2021. "Measuring the presence of organized crime across Italian provinces: a sensitivity analysis," European Journal of Law and Economics, Springer, vol. 51(1), pages 31-95, February.

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    More about this item

    Keywords

    Markov Matrix; Occupational Mobility; Opportunities; Mobility Indexes.;
    All these keywords.

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies

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