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

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.