Pre-1959 mafia families operated as independent territorial monopolies without federation

Evidence

Before this time mafia families were not connected by a collective structure. As Judge Cesare Terranova put it, they “were a mosaic of small republics with topographical borders marked by tradition” (CPM: 4-xvii, 656), or, as an economist might say, a territorial oligopoly more akin to a constellation of independent firms than a federation of units bound by explicit rules. The equilibrium held, when it did, because of “natural” mechanisms, dependent on both protection and the dynamics of the protected markets, and also because of casual bargaining between pairs or among clusters of firms. — Diego Gambetta, The Sicilian Mafia The Business of…, 283

Categorization

• XREF: The ‘constellation of independent firms’ oligopoly framing maps directly onto Milgrom et al.’s pre-institution trade model: how coordination emerges when independent units transact casually before formal cartel institutions appear.
• DEFINE: Establishes the counterfactual baseline for the entire chapter: the mafia’s later cartel structure is the institutional innovation under study.