Mafias as Enforcers

Historical evidence suggests that Mafias originally formed to provide enforcement of legitimate property rights when state enforcement was weak. We provide a general equilibrium model of Mafias as enforcement coalitions which protect property from predators. Both the level of predation and the type of enforcement ≥ self-enforcement, specialized competitive enforcement and Mafia enforcement ≥ are endogenous. We identify the conditions under which a coalition emerges and persists and show that Mafias are most likely to be found at intermediate stages of economic development. We also show that Mafias might provide better enforcement to the rich than would a welfare-maximizing state, suggesting a difficulty in the emergence and persistence of state provision of enforcement.