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Mafia and bricks: unfair competition in local markets and policy interventions

Author

Listed:
  • Livio Ferrante

    (University of Catania)

  • Stefania Fontana

    (University of Catania)

  • Francesco Reito

    (University of Catania)

Abstract

One of the characteristics of modern mafia-type organizations is their ability to infiltrate or influence the legal economy. In this paper, we provide evidence of the strong relationship between mafia and market concentration in Sicily. We use data on Sicilian municipalities and show that the presence of mafia-type organizations is associated with a high degree of market concentration in the construction industry. We also analyze the impact of two anti-mafia policies, the dismissal of city councils for mafia infiltration, and the seizure and reassignment of firms owned by the mafia, and evaluate their effects on the degree of competition in local entrepreneurship. We show that the seizure policy, which directly affects the financial interests of criminal organizations, can reduce their dominant economic positions and lead to higher market competition.

Suggested Citation

  • Livio Ferrante & Stefania Fontana & Francesco Reito, 2021. "Mafia and bricks: unfair competition in local markets and policy interventions," Small Business Economics, Springer, vol. 56(4), pages 1461-1484, April.
    • Handle: RePEc:kap:sbusec:v:56:y:2021:i:4:d:10.1007_s11187-019-00250-w
    DOI: 10.1007/s11187-019-00250-w
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    Cited by:

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    2. Maoyong Cheng & Zhenjun Li, 2023. "Public governance and firm total factor productivity: Evidence from a quasi‐natural event in China," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 31(3), pages 683-719, July.
    3. Francesca M. Calamunci & Livio Ferrante & Rossana Scebba, 2022. "Closed for mafia: Evidence from the removal of mafia firms on commercial property values," Journal of Regional Science, Wiley Blackwell, vol. 62(5), pages 1487-1511, November.

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    More about this item

    Keywords

    Mafia; Rent-seeking; Market concentration; Construction sector; Sicily;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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