Larger cartels require violence from outside the membership to police agreements

Evidence

The greater the number of firms, the harder it becomes to ensure that they all will keep their word. A building contractor spoke of a “line” of as many as 160 firms. It took a great deal of patience and maneuvering before be eventually succeeded, as he put it, in “buying” a contract: “It is obvious that to safeguard agreements of this size, one needs the threat of violence” (I-4). This threat is not supplied by any member of the cartel; at most, the enforcer “owns a few caterpillars.” Without such a threat, as the Organized Crime Task Force (OCTF) in New York also found, “bid-rigging conspiracies may founder because the conspirators are unable to police their cartels effectively” (1988: 38). — Diego Gambetta, The Sicilian Mafia The Business of…, 570

Categorization

• XREF: Validates Gambetta’s core thesis—violence as a specialized commodity supplied by mafiosi precisely because insiders cannot credibly police themselves. Echoes Milgrom’s finding that full-history monitoring is too costly for efficient trade.