Regulatory reform failed even when new entrants appeared because mafia clans absorbed them

Evidence

Neither report’s recommendations were implemented, as their authors complained to the antimafia commission. The commission in turn blamed the passivity of local authorities and made four recommendations of its own: to invite new applicants by advertising widely all over the country; to open the market to cooperatives of fishermen (which did not yet exist); to step up site surveillance in order to prevent collusion among middlemen, auctioneers, and wholesale dealers; and finally, to modernize of the market site (in 1969 refrigerators had been installed but were not yet in operation). In 1969, while the inquiry was still going on, a fifth dealer materialized at the market. The commission was unimpressed, however, for he too belonged “to one of the two clans ruling over the market” (CPM-RMI: 102). — Diego Gambetta, The Sicilian Mafia The Business of…, 537

Categorization

• XREF: Shows institutional reform’s limits: anti-monopoly interventions fail when the state cannot control entry, echoing Milgrom’s point that institutions substituting for reputation require actual enforcement capacity the state lacked here.