Established mafia cartel firms cannot be easily displaced by outside interlopers, even during war

Evidence

The fate of Giuseppe Di Stefano is a powerful illustration of the fact that established protection firms in Sicily cannot easily be displaced by outside groups even during a war. Judge Giovanni Falcone wrote that bloodshed in the streets of Sicilian towns is often a sign of conflict between a mafia family and a group which does not belong to the cartel (Falcone and Padovani 1991: 37-38). Firms may fight one another, but they do so as coalitions rather than individuals. Coalitions have a number of advantages in this market. In peacetime they allow firms to become securely settled, extending the loyal networks of both customers and employees, and ultimately making them capable of survival and regeneration even when a war is lost. In our example Di Stefano, the interloper, was squeezed out in the process; the victorious Palermo cartel chose to back the older (and now tame) Agrigento group rather than promote the maverick Di Stefano. Sicilian protection firms have not been able to avoid wars by operating as a cartel, but they have at least managed to deter younger men from being too impatient to become independently established in the trade. When the exception, such as Di Stefano, dares to mount a challenge, he pays a fearsome price. “Self-made men,” as Stefano Calzetta explained, “don’t live long” (SC: I, 2). — Diego Gambetta, The Sicilian Mafia The Business of…, 275

Categorization

• XREF: Directly maps onto Milgrom’s analysis of how incumbent trade institutions with sunk reputational investments resist displacement by newcomers, and onto Gambetta’s own licensing framework.
• QUESTION: Can the cartel deter entry through reputation/reputation of violence alone, or does it depend on the specific violence capacity that a coalition pooling provides?