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Assessing Market (Dis)Integration in Early Modern China and Europe

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  • Daniel M. Bernhofen
  • Markus Eberhardt
  • Jianan Li
  • Stephen Morgan

Abstract

This paper challenges established claims of comparable degrees of market integration in Europe and China on the eve of industrialization. Our empirical strategy focuses on the dynamics of price convergence and accounts for general equilibrium effects arising from common shocks and network effects. Using monthly grain prices for 1740-1820 our analysis uncovers a secular process of market disintegration in 221 prefectures of Qing China. Comparing our results with those for grain price panels from Western Europe we conclude that in terms of market integration the Great Divergence was well under way decades before the start of the 19th century.

Suggested Citation

  • Daniel M. Bernhofen & Markus Eberhardt & Jianan Li & Stephen Morgan, 2015. "Assessing Market (Dis)Integration in Early Modern China and Europe," CESifo Working Paper Series 5580, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_5580
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    References listed on IDEAS

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    Cited by:

    1. Greif, Avner & Tabellini, Guido, 2017. "The clan and the corporation: Sustaining cooperation in China and Europe," Journal of Comparative Economics, Elsevier, vol. 45(1), pages 1-35.
    2. Broadberry, Stephen N & Guan, Hanhui & Li, David Daokui, 2017. "China, Europe and the great Divergence: A Study in Historical National Accounting, 980-1850," CEPR Discussion Papers 11972, C.E.P.R. Discussion Papers.
    3. Daniel Bernhofen & Markus Eberhardt & Jianan Li & Stephen Morgan, 2017. "The evolution of markets in China and Western Europe on the eve of industrialisation," Discussion Papers 2017-12, University of Nottingham, GEP.

    More about this item

    Keywords

    comparison of Chinese and western European market integration; price convergence; common factor model; cross-section dependence;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • N75 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Asia including Middle East
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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