Territorial protection markets are easier to police than functional ones

Evidence

One way to avoid competition is to isolate customers from competitors, either by exploiting natural or commercial barriers or by taking deliberate action (regulating information, using coercion, or some combination of the two). This type of regulation is easier if the protection market and the geographical territory coincide, as customers are more readily policed within territorial than functional boundaries. Enforcement is also easier when transactions are limited to individuals operating within those territorial boundaries. As soon as the flow of information, commodities, and people comes, for whatever reason, under pressure to expand to other locations, this solution no longer suffices. — Diego Gambetta, The Sicilian Mafia The Business of…, 188