Closed for Mafia: Evidence from the removal of mafia firms on commercial property values

Using a sample of almost 7,000 Italian municipalities from 2002 to 2019, we investigate how the removal of mafia-infiltrated firms affects commercial sale and rental prices. We conjecture that targeting mafia businesses leads to a reduction in local disamenities and an increase in the demand for commercial properties. Applying the latest methodologies based on difference-in-differences approaches, we show that anti-mafia policies aimed at confiscating and reassigning mafia firms have positive spillover effects on commercial real estate prices, driving values upward by about 4%. This is especially true for small-medium municipalities in mafia-ridden provinces. The evidence we provide supports the enforcement of anti-mafia policies with an economic content, as they pose a threat to criminal financial interests and curb the mafia influence on the market.