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The Economic History of Sovereignty: Communal Responsibility, the Extended Family, and the Firm

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  • Lars Boerner
  • Albrecht Ritschl

Abstract

Economic institutions encompassing increasingly sophisticated concepts of risksharing and liability flourished in Europe beginning in the High Middle Ages. These innovations occurred in an environment of fragmented local jurisdictions, not within the framework of the territorial state. In this short paper we attempt to sketch a unifying approach towards the interpretation of the emergence of these institutions. We argue that communal responsibility in medieval city-states created incentives for excessive risk-taking by individual merchants, and that the emergence of firms mitigated this problem. We also find that entity shielding in the sense of HANSMANN, KRAAKMAN, AND SQUIRE [2006] arose endogenously and is not primarily the result of regulation by local authorities.

Suggested Citation

  • Lars Boerner & Albrecht Ritschl, 2009. "The Economic History of Sovereignty: Communal Responsibility, the Extended Family, and the Firm," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 165(1), pages 99-112, March.
    • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200903)165:1_99:tehosc_2.0.tx_2-4
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    References listed on IDEAS

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    1. Volckart, Oliver, 2004. "The economics of feuding in late medieval Germany," Explorations in Economic History, Elsevier, vol. 41(3), pages 282-299, July.
    2. Lars Boerner & Albrecht Ritschl, 2010. "Communal Responsibility and the Coexistence of Money and Credit Under Anonymous Matching," CEP Discussion Papers dp1034, Centre for Economic Performance, LSE.
    3. Blomquist, Thomas W., 1971. "Commercial Association in Thirteenth-Century Lucca," Business History Review, Cambridge University Press, vol. 45(2), pages 157-178, July.
    4. Greif, Avner, 1996. "The Study of Organizations and Evolving Organizational Forms through History: Reflections from the Late Medieval Family Firm," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 5(2), pages 473-501.
    5. Avner Greif, 2002. "Institutions and Impersonal Exchange: From Communal to Individual Responsibility," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 158(1), pages 168-204, March.
    6. Shavell, S., 1986. "The judgment proof problem," International Review of Law and Economics, Elsevier, vol. 6(1), pages 45-58, June.
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    Citations

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    Cited by:

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    4. Christoph Engel & Urs Schweizer, 2009. "Editorial Preface," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 165(1), pages 1-4, March.
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    8. Pacala Anca, 2016. "The Modern Enterprise - Successor of Business Organization Forms in Ancient Rome and Medieval Europe," Oradea Journal of Business and Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 7-16, March.

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    More about this item

    JEL classification:

    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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