Nuclear Power and the Mob: Extortion in Japan
J. Mark Ramseyer
First published: 08 August 2016
https://doi.org/10.1111/jels.12122
Citations: 2
I gratefully acknowledge the hospitality of the University of Tokyo Law Faculty, and the generous financial support of the Harvard Law School. I received helpful comments and suggestions from Daniel Aldrich, David Law, Curtis Milhaupt, and Eric Rasmusen; workshop participants at the University of British Columbia, University of Cambridge, Harvard University, Hitotsubashi University, Notre Dame University, and Yale University; conference participants at the American Law & Economics Association, the Conference on Empirical Legal Studies and the Society for Institutional & Organizational Economics; and the referees for this journal.
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Abstract
Nuclear reactors entail massive nontransferrable site‐specific investments. The resulting appropriable quasi‐rents offer the mob a lucrative target. In exchange for large fees, it can either promise to “protect” the utility (and silence the reactor's local opponents) or “extort” from it (and desist from inciting those opponents).
Using prefecture‐level Japanese panel data covering the years 1980 to 2010, I find that extortion rates rise when a utility announces plans to build a reactor. The evidence is consistent with a straightforward account: once news about a utility's plans to build a new reactor leaks, the mob moves in to appropriate the large quasi‐rents from the utility, and stays to do what it does everywhere else—extort regular payments from local businesses.
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