Customers become tradeable assets under cartel allocation agreements
Evidence
To buyers this practice is often presented as a safeguard against the risk of cheating: “Buy from A (or sell to A) and you will be safe. Just let A know I sent you.” But when the practice works, it is irrelevant whether customers buy from A or B since neither A nor B will steal the other’s customers; instead they will agree “not to accept or seek business from customers who [are] currently served by another member” of the cartel (Reuter 1987: 28). What happens if the agreement is breached is easy to guess. Vincenzo Sinagra testified that the brother of a man “who had taken the liberty of selling construction supplies to somebody else’s customer was violently beaten (VS: I, 138). Customers effectively become part of the supplier’s assets; they are thus internalized and can be traded like any other form of property. — Diego Gambetta, The Sicilian Mafia The Business of…, 526
Categorization
Category: Connection Points
- XREF: Directly embodies the reader’s Gambetta/Milgrom framework: referral mechanisms as third-party enforcement, customers as internalized property with violent sanctions for breach.
- ADDENDUM: The ‘just let A know I sent you’ referral and internalized-customer mechanics are core evidence for the private-judge/arbitration model — usable as supporting material for a piece on third-party enforcement substituting for state legitimacy.
Related
- Mafia cartels internalize customers as tradeable property under threat of violence (similarity 0.88)
- Customer sharing succeeds when customers are location-fixed, enabling large-scale collusion (similarity 0.79)
Broader Connections
- Monopoly over clients can be restored by negotiation or sharing.
#expands(0.75) — Diego Gambetta, The Sicilian Mafia The Business of…, 450 - Customers exercise more protection-market choice where the monopoly is insecure
#complicates(0.72) — Diego Gambetta, The Sicilian Mafia The Business of…, 418 - Cartel organization is not an automatic equilibrium of protection markets
#complicates(0.72) — Diego Gambetta, The Sicilian Mafia The Business of…, 276