The phenomenon of racketeer control over an industry is much noted but there is little analysis of its sources, functioning, and consequences. This paper presents a case study of one market which has long had the reputation for racketeer control, solid waste collection in New York City. The workings of a customer allocation agreement are analyzed, focusing on the prices paid by carters in transfers of customers between them. The agreement has grown in strength over the last 25 years. It was initiated by racketeers utilizing their control of a corrupt union. However, racketeers now play a secondary enforcement role; the bulk of the returns from the agreement go to the carters themselves. The extensive prosecution and regulation of the carters since 1956 may have contributed to the agreement's strength, since the ability to exclude entrants rests on the unsavory reputation of the industry which has been enhanced by prosecution and regulation.
This report is part of the RAND Corporation Paper series. The paper was a product of the RAND Corporation from 1948 to 2003 that captured speeches, memorials, and derivative research, usually prepared on authors' own time and meant to be the scholarly or scientific contribution of individual authors to their professional fields. Papers were less formal than reports and did not require rigorous peer review.
This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit www.rand.org/pubs/permissions.
The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.