Location-bound commodities plus mafia presence allow territorial market-sharing by firms

Evidence

Asked why competition is so constrained in this industry, one builder replied that most of the customers are corporations or institutions (I-3; Yannucci 1989: 169). When customers are big, they are easily shared by suppliers: A gets the electric company contracts, B the water company, and so on. But even when customers are small, the nature of this commodity, which inevitably ties it to specific locations, combined with the presence of the mafia, provides firms an opportunity to share territories. When a bank employee built a small villa in the Zen district of Palermo, the local boss (despite being in prison at the time) imposed his contractors and painters. The bill was nearly twice the sticker price (I-16). — Diego Gambetta, The Sicilian Mafia The Business of…, 568

Categorization

• XREF: The boss enforcing contractors’ share even from prison is a private enforcer continuing to guarantee cartel discipline — matches Schellingian commitment, where the boss’s authority substitutes for written contract.