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The organization of Eastern merchant empires

  • Rei, Claudia

In the sixteenth century, European countries engaged in long-distance trade with the East. Despite sharing the same objectives and technology, Portugal opted for a crown monopoly, England, the Netherlands, and Sweden franchised trade to private merchants, whereas in Denmark and France, king and merchants shared control. The financial condition of the crown appears to have been relevant for the monarchs' decision. I provide an economic mechanism to illuminate the historical variation in terms of the differences in relative endowments of king and merchants within each country. I also explore the implications of control allocation using archival data on labor compensation and shipping technology. Differences in the long run performance of merchant empires suggest a major impact of organization.

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

Volume (Year): 48 (2011)
Issue (Month): 1 (January)
Pages: 116-135

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Handle: RePEc:eee:exehis:v:48:y:2011:i:1:p:116-135
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622830

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