Jamal Awil

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Market challengers must raise loyalty costs, not cut prices. [causal]

Economists may wonder why the new challenger demands more money rather than less, whereas the usual strategy for entering a monopoly market is to undercut prices. In the case of protection, however, cheaper services and more refined manners would not produce the desired effect, for the fear of retaliation would keep customers loyal to their established supplier. Thus, the challenger must first raise the extramonetary cost of remaining loyal to the old mafioso rather than emphasizing the benefits of switching suppliers. By doing so and getting away with it, he shows both that he is to be feared more than his rival and that he can supply better protection (see also Chapter 2).

Diego Gambetta, The Sicilian Mafia The Busi…, loc. 990