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The international political economy of early modern copper mercantilism: Rent seeking and copper money in Sweden 1624–1776

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  • Edvinsson, Rodney

Abstract

In 1624–1776 Sweden minted intrinsic value copper coins, alongside silver coins. One purpose behind introducing the copper standard was to use its monopoly position at the European markets to manipulate the international copper prices, implementing a kind of copper mercantilism. This paper presents a model of an early modern copper monopolist that could price discriminate between two different uses for copper: copper for export and copper for minting. The paper concludes that authorities did not completely conform to this rent-seeking model, since there were also other considerations behind minting policy, such as providing a stable monetary system. The model shows that under profit-maximisation minting should have been even higher and the price of copper money lower, but at periods minting and prices approached the optimal state. In the 17th century, the market for copper money was probably too small relative the huge copper production, but by the 1720s and 1730s, when copper production had declined, the copper standard functioned more smoothly.

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Bibliographic Info

Article provided by Elsevier in its journal Explorations in Economic History.

Volume (Year): 49 (2012)
Issue (Month): 3 ()
Pages: 303-315

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Handle: RePEc:eee:exehis:v:49:y:2012:i:3:p:303-315

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Web page: http://www.elsevier.com/locate/inca/622830

Related research

Keywords: Money; Copper; Mercantilism; Monopoly; Bimetallism; Sweden;

References

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  1. Schmalensee, Richard., 1980. "Output and welfare implications of monopolistic third-degree price discrimination," Working papers 1095-80., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  2. Flandreau, Marc, 2004. "The Glitter of Gold: France, Bimetallism, and the Emergence of the International Gold Standard, 1848-1873," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780199257867, October.
  3. Rodney Edvinsson, 2012. "Early modern copper money: multiple currencies and trimetallism in Sweden 1624-1776," European Review of Economic History, Oxford University Press, Oxford University Press, vol. 16(4), pages 408-429, November.
  4. N. J. Mayhew, 1995. "Population, money supply, and the velocity of circulation in England, 1300–1700," Economic History Review, Economic History Society, Economic History Society, vol. 48(2), pages 238-257, 05.
  5. Friedman, Milton, 1990. "Bimetallism Revisited," Journal of Economic Perspectives, American Economic Association, vol. 4(4), pages 85-104, Fall.
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