I am a great fan of Mario Puzo's The Godfather and, of course, of Scorcese's movies. So I was fascinated y this new paper:
We use a unique and unexplored dataset to investigate the determinants and effects of mafia firms in Italy. Mafia may use several tools to expand its firms. However, in this paper, we show that they prefer political corruption to violence to expand mafia firms. In particular, they use the latter more to build up their reputation in new established regions. Mafia firms hamper entrepreneurial activity but they can have beneficial effects on unemployment if mafia firms add to not substitute current economic activities. Policy makers should take account of this twofold effects of mafia firms.
Alfano, Maria Rosaria and Cantabene, Claudia and Silipo, Damiano Bruno, Mafia Firms and Aftermaths (October 25, 2019). FEEM Working Paper No. 21.2019. Available at SSRN: https://ssrn.com/abstract=3475376 or http://dx.doi.org/10.2139/ssrn.3475376
One os reminded of Don Corleone's preference for making someone an offer they can't refuse rather than using violence.
