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Market integration and institutional change

Author

Listed:
  • Wolfgang Keller

    (University of Colorado)

  • Carol H. Shiue

    (University of Colorado)

Abstract

This paper examines the impact of institutional change on market integration. We show that the French Revolution’s ideals of freedom and equality that swept through Germany following French rule around the year 1800 significantly reduced city-to-city price gaps in nineteenth century Germany because the ideas led to institutional upgrading in the German states. The economic impact of institutions reduced price gaps by about 25%. Examining a range of indicators of institutional quality, we find that relatively broad indicators affecting multiple elements of commercial activity are most powerful in explaining institutions’ effect on the integration between economies. The paper shows that institutional change does not only change a given, individual economy but its impact is multiplied because institutional change affects the relationship between multiple economies.

Suggested Citation

  • Wolfgang Keller & Carol H. Shiue, 2020. "Market integration and institutional change," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 156(2), pages 251-285, May.
    • Handle: RePEc:spr:weltar:v:156:y:2020:i:2:d:10.1007_s10290-019-00362-1
    DOI: 10.1007/s10290-019-00362-1
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    Cited by:

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    4. CERMEÑO, Alexandra L. & SANTIAGO-Caballero, Carlos, 2023. "Closing the price gap - Von Thünen applied to wheat markets in 18th century Spain," CEI Working Paper Series 2023-01, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.

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    More about this item

    Keywords

    Institutions; Market integration; Political economy;
    All these keywords.

    JEL classification:

    • N4 - Economic History - - Government, War, Law, International Relations, and Regulation
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • F5 - International Economics - - International Relations, National Security, and International Political Economy

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