Abstract

This essay analyses the interactions between mafia organisations and the set of formal and informal institutional constraints that the mafia itself has contributed to shaping in a complex "path dependent" process. Mafia organisations provide private guarantees in social and economic exchanges characterised by low trust and high transaction costs. The emergence of such protective agencies in some areas, fostered by the pre-existing institutional context, initiated a process of acquisition of knowledge and abilities, related to the use of violence for the protection of weak property rights, which in turn reinforced the demand for such agencies' services and undermined the possibilities of economic and political development. Since property rights are never fully specified, the properties of the commodity "protection" must be carefully considered in order to assess the relative efficiency of different organisations (including the state) in the production and distribution of rights among the public.