Resisting to the Extortion Racket: an Empirical Analysis

In this paper we perform a statistical evaluation of whether it is worthwhile, in economic terms, to resist to extortion demands by the maa, from the point of view of rms operating in an area dominated by criminal organizations. We use a unique collected and matched database on rm characteristics on the city of Palermo, highly controlled by the maa racket. The underlined idea is that the claimed resistance has (direct and indirect) costs and benets, so that a rational rm should take this decision according its economic expectations on the future prots (in addition to potential ethic considerations). It means that the economic policy messages of this experience can be linked to make more protable the racket resistance (as a signal sent to the market). Our evidences based on multilevel discrete choice models show that this decision is strongly in uenced by socio-economic characteristics of the district, type of activity involved and other factors.