Integration and Deregulation of European Grain Markets, 1500-1900

This paper gives straightforward answers to complex problems. First it identifies the adverse affects of the high price volatility typical of segmented grain markets during the ancien régime. Extending a result in the modern literature on poverty and famines it is argued that price stability improves 'survival' chances in a given capability state, such as the capability to participate in the labour market or to perform normal 'doings and beings'. Price instability in segmented markets was caused by local and independent supply shocks but these shocks had less and less impact on prices on, say, local wheat, because of the increased number of substitutes, such as wheat from other markets or other types of food, due to market integration permitted by lower transport, storage, and transaction costs. Then it asks why grain markets after centuries of regulation and public intervention enter a long century of deregulation starting c. 1750, and finally can be characterized as 'laissez-faire' markets. Cost-reducing technological progress stimulated integration which implied price stabilization and the waning of market power.