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On the Enforcement of Trade Embargoes by the Merchant Guilds

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  • Fehr, Nils-Henrik M. von der
  • Harbord, David

Abstract

Compensation from rulers of trading centres to merchants whose property rights had been violated was a notable feature of early European international trade. We demonstrate in a repeated-game model that demands for compensation made threats by merchant guilds to impose trade boycotts self-enforcing for individual merchants, thus removing incentives for embargo breaking that could otherwise have rendered guilds powerless. Long-distance merchants were thus protected from predation by medieval city rulers, possibly providing a foundation for the trade expansion of the `Commercial Revolution'. We also address the frequently neglected issue of whether the guilds and cities would have agreed on the level of trade which they wished to support.

Suggested Citation

  • Fehr, Nils-Henrik M. von der & Harbord, David, 2018. "On the Enforcement of Trade Embargoes by the Merchant Guilds," MPRA Paper 88431, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:88431
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    References listed on IDEAS

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    More about this item

    Keywords

    International trade; institutions; noncooperative games; merchant guilds;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • N43 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: Pre-1913

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