Does private regulation work to provide and preserve collective benefits, and if so, when? To answer these questions, we focus on social structure and competitive exclusion. We argue that effective private regulation depends on social structures that support normative control of interested parties. However, competitive dynamics may transform private regulation into an instrument to defend the interest of institutional incumbents. Excluding economic rivals from private regulation causes market fragmentation which undermines the effectiveness of private regulation to supply order for a whole market. Empirically, we investigate the New York Clearing House Association (NYCHA), a private regulation program among banks in Manhattan, and analyze the impact of the NYCHA affiliation on the survival and the operational risk of banks. We find that NYCHA member banks survived longer and operated more prudently when the social network among elite bankers was dense. But the protection that the NYCHA provided for its members declined significantly when more banks were excluded.