Abstract:

How does economic competition affect social interactions outside of the market? We explore this question in the context of ”economic aryanization” during WWII in occupied Bordeaux. This policy, which aimed at ”permanently removing Jewish influence from the economy,” allowed regional authorities significant leeway, enabling local firms to shape its implementation. We examine the role of competing gentile firms for the expropriation of Jewish firms. Combining data on the universe of Jewish firms and the 1939-1944 Yellow Pages, we reconstruct the relevant market structure with high granularity. Across a variety of specifications, we find that Jewish firms are about 1.7 to 2 times more likely to be expropriated if they are in close competition with a gentile firm. This effect vanishes in presence of Jewish competitors. These results are confirmed by a structural model in which the distance between gentile and Jewish competitors is a key driver of denunciation. They are also confirmed by a natural experiment in which we exploit aerial bombings as a source of exogenous variation of the market structure. Last, we show that the expropriation of Jewish firms potentially improved the profitability of gentile competitors.