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The secret of Venetian success: a public-order, reputation-based institution

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  • GONZÃ LEZ DE LARA, YADIRA

Abstract

This article examines the institutional foundations of the financial market underpinning Venice's commercial success during the late medieval period. A public-order, reputation-based institution enabled merchants to commit (i) not to flee with investors' capital, despite the limited geographical reach of the legal system, and (ii) not to breach their contracts, despite the investors' inability to directly monitor them. Economic rents in Venice motivated merchants to submit to the city's authorities, while tight administrative trading controls provided the information required to verify a contractual breach. These institutional arrangements differed from other public-order and reputation-based institutions that have been considered in the literature.

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  • Gonzã Lez De Lara, Yadira, 2008. "The secret of Venetian success: a public-order, reputation-based institution," European Review of Economic History, Cambridge University Press, vol. 12(3), pages 247-285, December.
    • Handle: RePEc:cup:ereveh:v:12:y:2008:i:03:p:247-285_00
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    Cited by:

    1. Daniel J. Smith & George R. Crowley & J. Sebastian Leguizamon, 2021. "Long live the doge? Death as a term limit on Venetian chief executives," Public Choice, Springer, vol. 188(3), pages 333-359, September.
    2. Mika Kallioinen, 2017. "Inter‐communal institutions in medieval trade," Economic History Review, Economic History Society, vol. 70(4), pages 1131-1152, November.
    3. Diego Puga & Daniel Trefler, 2014. "International Trade and Institutional Change: Medieval Venice’s Response to Globalization," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(2), pages 753-821.
    4. Greif, Avner & Tabellini, Guido, 2017. "The clan and the corporation: Sustaining cooperation in China and Europe," Journal of Comparative Economics, Elsevier, vol. 45(1), pages 1-35.
    5. Christian Dippel & Avner Greif & Daniel Trefler, 2020. "Outside Options, Coercion, and Wages: Removing the Sugar Coating," The Economic Journal, Royal Economic Society, vol. 130(630), pages 1678-1714.
    6. Daniel J. Smith, 2020. "Turn-taking in office," Constitutional Political Economy, Springer, vol. 31(2), pages 205-226, June.
    7. Rania Adel Al-Bawwab, 2022. "The zecca mint: a self-enforcing monetary constitution in historic venice," Economics of Governance, Springer, vol. 23(1), pages 1-15, March.
    8. Iodice Antonio, 2023. "Marine Insurance in Early Modern Genoa (1564–1571): A Risk-Shifting or Risk-Sharing Tool?," Asia-Pacific Journal of Risk and Insurance, De Gruyter, vol. 17(2), pages 215-231, July.
    9. Nunn, Nathan & Trefler, Daniel, 2014. "Domestic Institutions as a Source of Comparative Advantage," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 263-315, Elsevier.

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