Excluded firms counter collusive monopolies by hiring rivals or informers

Evidence

In principle this system could lead to the creation of monopolies in which P and a particular firm establish a long-term alliance at the expense of all other competitors. In practice, however, excluded firms would retaliate either by recruiting protectors of their own or going to the police. — Diego Gambetta, The Sicilian Mafia The Business of…, 579

Categorization

• XREF: This is a competitive-equilibrium check on the private-protection model: protection suppliers themselves face entry/substitution, echoing the diamond cartel’s discipline against free riders.