Protection from competition

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Protection from competition

Post  kosovohp on Fri Oct 22, 2010 10:18 pm

Mafiosi sometimes protect businessmen from competitors by threatening their competitors with violence. For instance, if two businessmen are competing for a government contract, the protected can ask his mafioso friends to bully his rival out of the bidding process. Or a mafioso, acting on behalf of a coffee wholesaler, might pressure local bars into serving only his client's coffee.

More often than simple intimidation of competitors, mafiosi are often asked to oversee collusive agreements between businessmen. Mafia-enforced collusion typically appear in markets where collusion is both desirable (inelastic demand, lack of product differentiation, etc) and difficult to set up (numerous competitors, low barriers to entry)[50]

A mafioso might also be asked to arbitrate transactions in cases where the parties do not trust each other, such as black market deals where the law does not intervene. In exchange for a commission paid by both parties, the mafioso uses the threat of violence to ensure that neither side cheats the other.

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