Closed for mafia. Evidence from the removal of mafia firms on commercial property values

Using a sample of almost 7000 Italian municipalities from 2002 to 2019, we investigate how the removal of mafia-infiltrated firms affects commercial sale and rental prices. We conjecture that targeting mafia businesses leads to a reduction in local disamenities and an increase in the demand for commercial properties. Applying the latest methodologies based on difference-in-differences approaches, we show that antimafia policies aimed at confiscating and reassigning mafia firms have positive spillover effects on commercial real estate prices, driving values upward by about 4%. This is especially true for small–medium municipalities in mafia-ridden provinces. The evidence we provide supports the enforcement of antimafia policies with an economic content, as they pose a threat to criminal financial interests and curb the mafia influence in the market.