Origins of the Sicilian Mafia: The Market for Lemons?

Great paper by Arcangelo Dimico, Alessia Isopi and Ola Olsson in Journal of Economic History, 77(4), 1083-115, Dec 2017.

“In this article, we have investigated the origins of the Sicilian mafia. Unlike existing works that emphasize political and historical factors, our analysis identifies the importance of an exogenous shock in the international demand for lemons. The extraordinary revenues that certain producers received, combined with the general political insecurity and weak rule of law, provided an ideal breeding ground for the emergence of a mafia that provided protection and acted as intermediaries. The empirical analysis, using data from two sources, shows that the presence of mafia is strongly related to the production of citrus fruits. The results continue to hold when we include several control variables, address a possible endogeneity issue and employ two different dependent variables.”