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Coordination, compensation and the expansion of trade: The merchant guilds revisited

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  • Harbord, David
  • Fehr, Nils Henrik von der

Abstract

Greif, Milgrom and Weingast (1994) argued that the ability of the merchant guilds to encourage trade expansion required an internal mechanism to enforce compliance to trade embargoes, otherwise credible incentives for "embargo breaking" would have rendered them ine¤ectual. We show that sustaining e¢ cient trade implied an ability of the guilds to restrict their membership but no internal enforcement mechanism was necessary. Our reformulation of the guilds´ strategies - based on the historical evidence - makes trade embargoes self-enforcing and allows us to provide a richer picture of how the guilds could have facilitated trade expansion by controlling merchant trading activities.

Suggested Citation

  • Harbord, David & Fehr, Nils Henrik von der, 2011. "Coordination, compensation and the expansion of trade: The merchant guilds revisited," MPRA Paper 40992, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:40992
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    References listed on IDEAS

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    More about this item

    Keywords

    medieval trade; coordination; guilds;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • N73 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Europe: Pre-1913
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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