Merchant guilds have been portrayed as "social networks" that generated beneficial "social capital" by sustaining shared norms, effectively transmitting information, and successfully undertaking collective action. This social capital, it is claimed, benefited society as a whole by enabling rulers to commit to providing a secure trading environment for alien merchants. But was this really the case? We develop a new model of the emergence, rise, and eventual decline of European merchant guilds, which explores the collusive relationship between rulers and guilds, and calls into question the prevailing positive view of merchant guilds. We then confront the model's predictions with the available historical data. The empirical evidence strongly supports our model, and refutes existing theories. Our findings show that merchant guilds used their social capital for socially harmful as well as beneficial ends.
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number
CESifo Working Paper No. 1037.
Find related papers by JEL classification: F10 - International Economics - - Trade - - - General L40 - Industrial Organization - - Antitrust Issues and Policies - - - General N40 - Economic History - - Government, War, Law, and Regulation - - - General, International, or Comparative
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