Protection-market oligopolies stay stable through mutual deterrence but stay fragile

Evidence

The stability of an oligopoly among protection firms depends largely on mutual fear: by responding to escalations in strength and never relinquishing a minimum capacity for effective retaliation, agents can discourage aggression. Such a state of equilibrium does not require cooperation among firms, any more than it does among nations. It is, however, fragile. The disappearance of a boss, for instance, reinforces neigh boring firms, which automatically inherit both customers and employees, neither of whom can survive without protection. These firms thereby represent an instant threat to others with which they were previously equal. Alternatively, the emergence of new markets for protection may send a shock wave through the system as firms compete and the status quo collapses (the drug marker is a case in point, as we shall see in Chapter 9). — Diego Gambetta, The Sicilian Mafia The Business of…, 189

Categorization

• XREF: The fragility from a boss’s disappearance maps directly onto the power vacuum following Vito Corleone’s death in The Godfather, where rival families immediately move on the weakened Corleone operations.