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Merchant guilds, taxation and social capital

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  • Dessí, Roberta
  • Piccolo, Salvatore

Abstract

We develop a theory of the emergence of merchant guilds as an efficient mechanism to foster cooperation between merchants and rulers, building on the complementarity between merchant guilds’ ability to enforce monopoly over trade and their social capital. Unlike existing models, we focus on local merchant guilds, rather than alien guilds, accounting for the main observed features of their behavior, internal organization and relationship with rulers. Our model delivers novel predictions about the emergence, variation, functioning, and eventual decline of this highly successful historical form of network. Our theory reconciles previous explanations and the large body of historical evidence on medieval merchant guilds. In doing so, we also shed novel light on the role of the guilds’ social capital, and its importance for taxation, welfare, and the development of towns and their government in medieval Europe.

Suggested Citation

  • Dessí, Roberta & Piccolo, Salvatore, 2016. "Merchant guilds, taxation and social capital," European Economic Review, Elsevier, vol. 83(C), pages 90-110.
  • Handle: RePEc:eee:eecrev:v:83:y:2016:i:c:p:90-110
    DOI: 10.1016/j.euroecorev.2015.12.005
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    References listed on IDEAS

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    Keywords

    Merchant guild; Social capital; Trade; Taxation;

    JEL classification:

    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • N7 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services
    • N8 - Economic History - - Micro-Business History

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