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Merchant Guilds, Taxation and Social Capital

Author

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  • Dessi, 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

  • Dessi, Roberta & Piccolo, Salvatore, 2015. "Merchant Guilds, Taxation and Social Capital," TSE Working Papers 15-581, Toulouse School of Economics (TSE).
    • Handle: RePEc:tse:wpaper:29364
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    References listed on IDEAS

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    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. David Dolejší, 2022. "Feudal bargain in Prague: The rise, spread, and fall of craft guilds," Rationality and Society, , vol. 34(2), pages 237-267, May.
    3. 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).
    4. Wang, Xiaoquan & Wu, Qi & Zhang, Hong, 2025. "The role of social ties in spreading innovation: Evidence from alien merchant guilds in China," Journal of Economic Behavior & Organization, Elsevier, vol. 240(C).
    5. Manuel Rojas Echeverri, 2024. "The Effects of Productivity on Participation in Social Capital Groups: A Study of Small and Informal Firms in Colombia," Revista de Economía del Rosario, Universidad del Rosario, vol. 27(1), pages 1-34.
    6. Mauro, Luciano & Pigliaru, Francesco & Carmeci, Gaetano, 2023. "Decentralization, social capital, and regional growth: The case of the Italian North-South divide," European Journal of Political Economy, Elsevier, vol. 78(C).
    7. Ran Zhou & Jingjing Li & Hanying Wang, 2026. "The Influence of Alien Merchant Chambers on Enterprise R&D Investment: Evidence from China," SAGE Open, , vol. 16(1), pages 21582440251, January.
    8. Ramón Cobo-Reyes & Gabriel Katz & Thomas Markussen & Simone Meraglia, 2022. "Voting on sanctioning institutions in open and closed communities: experimental evidence," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 58(3), pages 619-677, April.
    9. Chen, Na, 2026. "Merchant guild culture and corporate violations: Evidence from China," China Economic Review, Elsevier, vol. 97(C).
    10. Zhang, Xiaoliang & Jiang, Jinjin & Liu, Zuxian & Chen, Lijun, 2025. "Cultural blueprint: Uncovering how merchant guild culture shapes corporate innovation," Finance Research Letters, Elsevier, vol. 85(PA).
    11. Wang, Xiaoyu & Long, Zhineng & Zhao, Xiangfang, 2024. "Merchant guild culture and cash holdings: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 94(C).
    12. Ran Zhou & Yali Zhao, 2024. "Alien merchant chambers and enterprise innovation: Evidence from China," American Journal of Economics and Sociology, Wiley Blackwell, vol. 83(3), pages 527-554, May.

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    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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