The Persistence of Organized Crime in New York City Construction: An Economic Perspective

Abstract

This study explores the strengths and weaknesses of economic reasoning in explaining, and suggesting remedies for, the stubborn presence of racketeering in New York City construction. In this industry, the authors argue, transactions cannot be conducted efficiently either between a large number of firms or within a few large firms. Consequently, criminals can “sell,” and profit from, their ability to impose organization on the industry. Criminal activity can persist because of barriers to entry in certain markets within the industry and because of industry characteristics such as constant changes of, and restricted access to, work sites. The role of unions as a monopolizing institution may also facilitate criminal control. These and other economic hypotheses are relevant to policy making, the authors maintain, even though they cannot be adequately tested with available data.