Nuclear Power and the Mob: Extortion in Japan

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.