A protection firm’s reputation substitutes directly for its enforcement capacity.

Evidence

Dealers in protection are no exception. As in all other businesses, a good reputation attracts customers and keeps competitors at bay. But it does significantly more than that. By far the most striking feature of a mafioso’s reputation is that it saves directly on production costs. Car manufacturers benefit from a good reputation, but they still have to produce cars. By contrast, a reputation for credible protection and protection itself tend to be one and the same thing. The more robust the reputation of a protection firm, the less the need to have recourse to the resources which support that reputation. — Diego Gambetta, The Sicilian Mafia The Business of…, 114

Categorization

• XREF: Directly parallels the ‘credible commitments’ logic — reputation as self-reinforcing deterrent that economizes on actual enforcement.