Racketeering in Legitimate Industries

A Study in The Economics of Intimidation

by Peter Reuter

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It is widely believed that certain industries in some cities are substantially influenced by members of organized crime. It is asserted that this influence, by stifling competition and/or extorting suppliers, imposes significant costs on both customers and firms. The available fragmentary evidence suggests that the problem is inherent in certain structural characteristics of the affected industries. Using data collected by the New York Organized Crime Task Force in an investigation of racketeering and collusion in the Long Island garbage collection industry, this report analyzes the influence of racketeers in this industry. It also examines three other industries in less detail — stevedoring, casinos, and garment trucking. Finally, the study presents an extended analysis of public policy options available for dealing with racketeer influence.

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