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Merchant Guilds, Taxation and Social Capital

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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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    Cited by:

    1. 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.
    2. 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).
    3. 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.
    4. 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).
    5. 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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    More about this item

    Keywords

    Merchant guild; Social capital; collusion; Political economy; Trade; Taxation;
    All these keywords.

    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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