IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/7374.html
   My bibliography  Save this paper

Two is Company, N is a Crowd? Merchant Guilds and Social Capital

Author

Listed:
  • Dessí, Roberta
  • Piccolo, Salvatore

Abstract

Local merchant guilds were ubiquitous in medieval Europe, and their development was inextricably linked with the development of towns and the rise of the merchant class. We develop a theory of the emergence of local merchant guilds as an efficient mechanism to implement collusion among merchants and rulers, building on the natural complementarity between merchants' market trading and mutual monitoring. Our model explains the main observed features of local merchant guilds' behavior, their rules and internal organization, including membership restrictions and exclusion, and their relationship with rulers. Moreover, it identifies the main channels through which the guilds' social capital influenced their ability to collude with rulers, and hence social welfare. As we show, the available historical evidence supports our theory, shedding new light on the role of the guilds' social capital. We then extend the model to analyze the key trade-offs faced by rulers in choosing whether to grant recognition to one or multiple guilds. This provides an additional rationale for the establishment of the alien merchant guilds first analyzed by Greif, Milgrom and Weingast (1994), helping us to understand the observed distribution of guilds and their characteristics.

Suggested Citation

  • Dessí, Roberta & Piccolo, Salvatore, 2009. "Two is Company, N is a Crowd? Merchant Guilds and Social Capital," CEPR Discussion Papers 7374, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:7374
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP7374
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Zhijun Chen & Patrick Rey, 2013. "On the Design of Leniency Programs," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 917-957.
    2. Jeffrey V. Butler & Paola Giuliano & Luigi Guiso, 2016. "The Right Amount Of Trust," Journal of the European Economic Association, European Economic Association, vol. 14(5), pages 1155-1180, October.
    3. Zak, Paul J & Knack, Stephen, 2001. "Trust and Growth," Economic Journal, Royal Economic Society, vol. 111(470), pages 295-321, April.
    4. Alberto Alesina & Eliana La Ferrara, 2000. "Participation in Heterogeneous Communities," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(3), pages 847-904.
    5. Stephen Knack & Philip Keefer, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1251-1288.
    6. Bardhan, Pranab, 1996. "The Nature of Institutional Impediments to Economic Development," Center for International and Development Economics Research (CIDER) Working Papers 233429, University of California-Berkeley, Department of Economics.
    7. Ogilvie,Sheilagh, 2011. "Institutions and European Trade," Cambridge Books, Cambridge University Press, number 9780521764179, January.
    8. Joel Sobel, 2002. "Can We Trust Social Capital?," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 139-154, March.
    9. Alesina, Alberto & La Ferrara, Eliana, 2002. "Who trusts others?," Journal of Public Economics, Elsevier, vol. 85(2), pages 207-234, August.
    10. Ran Abramitzky, 2008. "The Limits of Equality: Insights from the Israeli Kibbutz," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(3), pages 1111-1159.
    11. La Porta, Rafael, et al, 1997. "Trust in Large Organizations," American Economic Review, American Economic Association, vol. 87(2), pages 333-338, May.
    12. Edward L. Glaeser & David Laibson & Bruce Sacerdote, 2002. "An Economic Approach to Social Capital," Economic Journal, Royal Economic Society, vol. 112(483), pages 437-458, November.
    13. Spagnolo, Giancarlo, 1999. "Social relations and cooperation in organizations," Journal of Economic Behavior & Organization, Elsevier, vol. 38(1), pages 1-25, January.
    14. Richardson, Gary, 2004. "Guilds, laws, and markets for manufactured merchandise in late-medieval England," Explorations in Economic History, Elsevier, vol. 41(1), pages 1-25, January.
    15. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2004. "The Role of Social Capital in Financial Development," American Economic Review, American Economic Association, vol. 94(3), pages 526-556, June.
    16. Joseph E. Harrington & Myong-Hun Chang, 2009. "Modeling the Birth and Death of Cartels with an Application to Evaluating Competition Policy," Journal of the European Economic Association, MIT Press, vol. 7(6), pages 1400-1435, December.
    17. Roberta Dessí & Sheilagh Olgivie, 2003. "Social Capital and Collusion: The Case of Merchant Guilds," CESifo Working Paper Series 1037, CESifo.
    18. Edward L. Glaeser & David I. Laibson & José A. Scheinkman & Christine L. Soutter, 2000. "Measuring Trust," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(3), pages 811-846.
      • Glaeser, Edward Ludwig & Laibson, David I. & Scheinkman, Jose A. & Soutter, Christine L., 2000. "Measuring Trust," Scholarly Articles 4481497, Harvard University Department of Economics.
    19. Rotemberg, Julio J & Saloner, Garth, 1986. "A Supergame-Theoretic Model of Price Wars during Booms," American Economic Review, American Economic Association, vol. 76(3), pages 390-407, June.
    20. Joseph E. Harrington, Jr, 2006. "Modelling the Birth and Death of Cartels with an Application to Evaluating Antitrust Policy," Economics Working Paper Archive 532, The Johns Hopkins University,Department of Economics.
    21. Gary Richardson, 2005. "Craft Guilds and Christianity in Late-Medieval England," Rationality and Society, , vol. 17(2), pages 139-189, May.
    22. Oliver Volckart & Antje Mangels, 1999. "Are the Roots of the Modern Lex Mercatoria Really Medieval?," Southern Economic Journal, John Wiley & Sons, vol. 65(3), pages 427-450, January.
    23. Richardson, Gary, 2001. "A Tale of Two Theories: Monopolies and Craft Guilds in Medieval England and Modern Imagination," Journal of the History of Economic Thought, Cambridge University Press, vol. 23(2), pages 217-242, June.
    24. Alberto Alesina & Eliana La Ferrara, 2003. "Ethnic Diversity and Economic Performance," Harvard Institute of Economic Research Working Papers 2028, Harvard - Institute of Economic Research.
    25. Lopez, Robert Sabatino, 1943. "European Merchants in the Medieval Indies: The Evidence of Commercial Documents," The Journal of Economic History, Cambridge University Press, vol. 3(2), pages 164-184, November.
    26. Reynolds, Robert L., 1945. "In Search of a Business Class in Thirteenth-Century Genoa," The Journal of Economic History, Cambridge University Press, vol. 5(S1), pages 1-19, December.
    27. Greif, Avner & Milgrom, Paul & Weingast, Barry R, 1994. "Coordination, Commitment, and Enforcement: The Case of the Merchant Guild," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 745-776, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Charles Angelucci & Simone Meraglia, 2015. "Trade, Law and Order, and Political Liberties: Theory and Application to English Medieval Boroughs," Discussion Papers 1509, University of Exeter, Department of Economics.
    2. Angelucci, Charles & Meraglia, Simone, 2013. "Trade, Self-Governance,and the Provision of Law and Order, with an Application To Medieval English Chartered Towns," TSE Working Papers 13-443, Toulouse School of Economics (TSE).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dessí, Roberta & Piccolo, Salvatore, 2016. "Merchant guilds, taxation and social capital," European Economic Review, Elsevier, vol. 83(C), pages 90-110.
    2. Dessi, Roberta & Ogilvie, Sheilagh, 2004. "The Political Economy of Merchant Guilds: Commitment or Collusion ?," IDEI Working Papers 278, Institut d'Économie Industrielle (IDEI), Toulouse.
    3. Yamamura, Eiji, 2008. "The role of social capital in homogeneous society: Review of recent researches in Japan," MPRA Paper 11385, University Library of Munich, Germany.
    4. Sabatini, Fabio, 2006. "The Empirics of Social Capital and Economic Development: A Critical Perspective," Knowledge, Technology, Human Capital Working Papers 12097, Fondazione Eni Enrico Mattei (FEEM).
    5. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2010. "Civic Capital as the Missing Link," NBER Working Papers 15845, National Bureau of Economic Research, Inc.
    6. Yann Algan & Pierre Cahuc, 2014. "Trust, Well-Being and Growth: New Evidence and Policy Implications," Post-Print hal-01169659, HAL.
    7. Ali Recayi Ogcem & Ruth Tacneng & Amine Tarazi, 2021. "Trust and Financial Development: Forms of Trust and Ethnic Fractionalization Matter," Working Papers hal-03322592, HAL.
    8. Philip Keefer & Stephen Knack, 2008. "Social Capital, Social Norms and the New Institutional Economics," Springer Books, in: Claude Ménard & Mary M. Shirley (ed.), Handbook of New Institutional Economics, chapter 27, pages 701-725, Springer.
    9. Algan, Yann & Cahuc, Pierre, 2014. "Trust, Growth, and Well-Being: New Evidence and Policy Implications," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 2, pages 49-120, Elsevier.
    10. Xin, Guangyi, 2017. "Trust and Economic Performance: A Panel Study," MPRA Paper 80815, University Library of Munich, Germany.
    11. Thöni, Christian & Tyran, Jean-Robert & Wengström, Erik, 2012. "Microfoundations of social capital," Journal of Public Economics, Elsevier, vol. 96(7-8), pages 635-643.
    12. Armin Falk & Christian Zehnder, 2007. "Discrimination and In-group Favoritism in a Citywide Trust Experiment," IEW - Working Papers 318, Institute for Empirical Research in Economics - University of Zurich.
    13. repec:hal:spmain:info:hdl:2441/33o86cn6qp83dot08iir97915s is not listed on IDEAS
    14. L. Bottazzi & M. Da Rin & T. Hellmann, 2007. "The Importance of Trust for Investment: Evidence from Venture Capital," Working Papers 612, Dipartimento Scienze Economiche, Universita' di Bologna.
    15. Gupta, Atul & Raman, Kartik & Shang, Chenguang, 2018. "Social capital and the cost of equity," Journal of Banking & Finance, Elsevier, vol. 87(C), pages 102-117.
    16. Andrea Tesei, 2015. "Trust and Racial Income Inequality: Evidence from the U.S," Working Papers 737, Queen Mary University of London, School of Economics and Finance.
    17. Lorenzo Rocco & Elena Fumagalli & Marc Suhrcke, 2014. "From Social Capital To Health – And Back," Health Economics, John Wiley & Sons, Ltd., vol. 23(5), pages 586-605, May.
    18. Anderlini, Luca & Terlizzese, Daniele, 2017. "Equilibrium trust," Games and Economic Behavior, Elsevier, vol. 102(C), pages 624-644.
    19. Dora L. Costa & Matthew E. Kahn, 2003. "Cowards and Heroes: Group Loyalty in the American Civil War," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(2), pages 519-548.
    20. Greiner, Ben & Ockenfels, Axel & Werner, Peter, 2012. "The dynamic interplay of inequality and trust—An experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 81(2), pages 355-365.
    21. Rupasingha, Anil & Goetz, Stephan J. & Freshwater, David, 2006. "The production of social capital in US counties," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(1), pages 83-101, February.

    More about this item

    Keywords

    Collusion; Merchant guild; Political economy; Social capital; Taxation.; Trade;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • N4 - Economic History - - Government, War, Law, International Relations, and Regulation

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:7374. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.