Why are protection and enforcement integral parts of organized crime?

“Along the supply chain [of any illegal good] from primary producer to final consumer, however, there are a host of contractual enforcement and financing problems that have to be solved without recourse to the police, the legal system, or to mainstream financial institutions.” Hence, this need for protection and enforcement for the orderly and efficient conduct of business is filled by the organized crime groups themselves (Skaperdas, 2001). Moreover, the ability of organized crime groups “to enforce their rule within a specific geographic or economic area requires that they have the means to use force and therefore providing protection is an element common to all mafias and gangs irrespective of their other economic activities” (Skaperdas, 2001). 

References

Skaperdas, S. (2001). The political economy of organized crime: providing protection when the state does not. Economics of Governance 2, 173-202. Available at http://www.socsci.uci.edu/~sskaperd/SkaperdasEoG01.pdf.