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Risk, Transaction Costs, and Tax Assignment: Government Finance in the Ottoman Empire

Author

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  • Metin M. Cosgel

    (University of Connecticut)

  • Thomas J. Miceli

    (University of Connecticut)

Abstract

Risk and transaction costs often provide competing explanations of institutional outcomes. In this paper we argue that they offer opposing predictions regarding the assignment of fixed and variable taxes in a multi-tiered governmental structure. While the central government can pool regional risks from variable taxes, local governments can measure variable tax bases more accurately. Evidence on tax assignment from the mid-sixteenth century Ottoman Empire supports the transaction cost explanation, suggesting that risk matters less because insurance can be obtained in a variety of ways.

Suggested Citation

  • Metin M. Cosgel & Thomas J. Miceli, 2003. "Risk, Transaction Costs, and Tax Assignment: Government Finance in the Ottoman Empire," Working papers 2003-04, University of Connecticut, Department of Economics, revised Sep 2004.
    • Handle: RePEc:uct:uconnp:2003-04
    Note: We wish to thank the editor of the JOURNAL and two anonymous referees, the participants and discussants at the 2002 Annual Cliometrics Conference in La Crosse, WI; the 2003 Alumni Workshop in Iowa City, IA; and the 2003 Social Science History Association meetings in Baltimore, MD for helpful comments and suggestions. Ali Ozdemir, Sadik Yildirim, and Huseyin Yilmaz provided valuable research assistance.
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    Cited by:

    1. Coşgel, Metin M. & Miceli, Thomas J. & Rubin, Jared, 2012. "The political economy of mass printing: Legitimacy and technological change in the Ottoman Empire," Journal of Comparative Economics, Elsevier, vol. 40(3), pages 357-371.
    2. Alberto Bisin & Jared Rubin & Avner Seror & Thierry Verdier, 2021. "Culture, Institutions & the Long Divergence," NBER Working Papers 28488, National Bureau of Economic Research, Inc.
    3. Mehmet Serkan Tosun & Serdar Yilmaz, 2010. "Centralization, Decentralization And Conflict In The Middle East And North Africa," Middle East Development Journal (MEDJ), World Scientific Publishing Co. Pte. Ltd., vol. 2(01), pages 1-14.
    4. Murat Iyigun & Jared Rubin, 2017. "The Ideological Roots of Institutional Change," Working Papers 17-06, Chapman University, Economic Science Institute.
    5. Cosgel, Metin & Miceli, Thomas & Ahmed, Rasha, 2009. "Law, state power, and taxation in Islamic history," Journal of Economic Behavior & Organization, Elsevier, vol. 71(3), pages 704-717, September.
    6. Cosgel, Metin M., 2006. "Taxes, efficiency, and redistribution: Discriminatory taxation of villages in Ottoman Palestine, Southern Syria, and Transjordan in the sixteenth century," Explorations in Economic History, Elsevier, vol. 43(2), pages 332-356, April.

    More about this item

    Keywords

    Ottoman Empire; public finance; taxation; risk; transaction costs; tax assignment;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations
    • N3 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy
    • N5 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries

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