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Origins of the Sicilian Mafia: The Market for Lemons


  • Dimico, Arcangelo

    () (Queen's University)

  • Isopi, Alessia

    () (University of Manchester)

  • Olsson, Ola

    () (Department of Economics, School of Business, Economics and Law, Göteborg University)


Since its first appearance in the late 1800s, the origins of the Sicilian mafia have remained a largely unresolved mystery. Both institutional and historical explanations have been proposed in the literature through the years. In this paper, we develop an argument for a market structure -hypothesis, contending that mafia arose in towns where firms made unusually high pro…ts due to imperfect competition. We identify the produc- tion of citrus fruits as a sector with very high international demand as well as substantial fixed costs that acted as a barrier to entry in many places and secured high profits in others. We argue that the mafia arose out of the need to protect citrus production from predation by thieves. Using the original data from a parliamentary inquiry in 1881-86 on Sicilian towns, we show that mafia presence is strongly related to the production of orange and lemon. This result contrasts recent work that emphasizes the importance of land reforms and a broadening of property rights as the main reason for the emergence of mafia protection.

Suggested Citation

  • Dimico, Arcangelo & Isopi, Alessia & Olsson, Ola, 2012. "Origins of the Sicilian Mafia: The Market for Lemons," Working Papers in Economics 532, University of Gothenburg, Department of Economics.
  • Handle: RePEc:hhs:gunwpe:0532

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    References listed on IDEAS

    1. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2006. "Institutions and the Resource Curse," Economic Journal, Royal Economic Society, vol. 116(508), pages 1-20, January.
    2. Smith, Rodney T, 1976. "The Legal and Illegal Markets for Taxed Goods: Pure Theory and an Application to State Government Taxation of Distilled Spirits," Journal of Law and Economics, University of Chicago Press, vol. 19(2), pages 393-429, August.
    3. Frederick van der Ploeg, 2011. "Natural Resources: Curse or Blessing?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 366-420, June.
    4. Buonanno, Paolo & Durante, Ruben & Prarolo, Giovanni & Vanin, Paolo, 2011. "On the historical and geographic origins of the Sicilian mafia," MPRA Paper 37009, University Library of Munich, Germany, revised 01 Feb 2012.
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    Cited by:

    1. Barone, Guglielmo & Narciso, Gaia, 2015. "Organized crime and business subsidies: Where does the money go?," Journal of Urban Economics, Elsevier, vol. 86(C), pages 98-110.
    2. Paolo Buonanno & Ruben Durante & Giovanni Prarolo & Paolo Vanin, 2012. "Poor institutions, rich mines: resource curse and the origins of the Sicilian mafia," Working Papers 2012/29, Institut d'Economia de Barcelona (IEB).
    3. Giuseppe De Feo & Giacomo Davide De Luca, 2017. "Mafia in the Ballot Box," American Economic Journal: Economic Policy, American Economic Association, vol. 9(3), pages 134-167, August.
    4. Daron Acemoglu & Giuseppe De Feo & Giacomo De Luca, 2017. "Weak States: Causes and Consequences of the Sicilian Mafia," NBER Working Papers 24115, National Bureau of Economic Research, Inc.
    5. Paolo Pinotti, 2012. "The Economic Costs of Organized Crime: Evidence from Southern Italy," Working Papers 054, "Carlo F. Dondena" Centre for Research on Social Dynamics (DONDENA), Università Commerciale Luigi Bocconi.
    6. Guerriero, Carmine & de Oliveira, Guilherme, 2014. "Extractive States: The Case of the Italian Unification," MPRA Paper 70916, University Library of Munich, Germany, revised 13 Apr 2016.
    7. Aquilante, Tommaso & Maretto, Guido, 2016. "Cooperation in Criminal Markets," MPRA Paper 75949, University Library of Munich, Germany.
    8. Paolo Buonanno & Ruben Durante & Giovanni Prarolo & Giovanni Prarolo, 2013. "Rich Mines, Poor Institutions: Resource Curse and the Origins of the Sicilian Mafia," Sciences Po publications info:hdl:2441/16jvuuvsuc9, Sciences Po.

    More about this item


    mafia; Sicily; protection; barrier to entry; dominant position;

    JEL classification:

    • P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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