Decentralized coercion and self-restraint in provincial taxation: The Ottoman Empire, 15th-16th centuries

For technological reasons the central administration of a state may want to entrust to provincial delegates the dual tasks of extracting provincial resources and converting them into coercive force. This article establishes that the coercive threat that the delegates pose may make the administration cap the amount they extract. The cap will cause the state not to internalize the marginal benefits of provincial economic development. It will also induce inefficient economic policies. The identified institutional setup is consistent with the political regime, economic policy, and legislation of the Ottoman Empire during its classical age.