Cartel equilibria are more fragile than competitive ones

Evidence

Oligopoly, however, makes for a more precarious equilibrium than competition. Should a member of the cartel try to obtain a larger share, as in the case of the funeral homes in Naples, or should those excluded from the cartel start a countercoalition, the equilibrium would collapse, and that “respect” would be shattered. — Diego Gambetta, The Sicilian Mafia The Business of…, 562

Categorization

• XREF: Connects to the Schelling/credible-commitment thread: cartel stability depends on agents not defecting, which parallels the prisoner’s-dilemma logic in Milgrom’s law-merchant analysis. — connects to: Collusive agreements remain fragile and racketeers overstay their welcome; Racket-run cartels reduce production efficiency more than conventional cartels — Diego Gambetta, The Sicilian Mafia The Business of…, 531; Cartel organization is not an automatic equilibrium of protection markets (+4 more)
• corroborated: 2 independent passages support this claim — Diego Gambetta, The Sicilian Mafia The Business of…, 562

Broader Connections

• Cartel organization is not an automatic equilibrium of protection markets #corroborates (0.80)
• Client concentration and violent competition make mafia protection contracts fragile. #corroborates (0.80)
• Competitive pricing minimizes trust demands while cartels create them intensely #expands (0.75)
• Mafia protectors favor group cartels over monopolies to avoid defection risks #expands (0.75)
• Frequent repeated interaction makes cooperative trade equilibria feasible, whereas infrequent trade does not. #complicates (0.70)