Article

Merchant Guilds, Taxation and Social Capital

Roberta Dessi, and Salvatore Piccolo

Abstract

We develop a theory of the emergence of merchant guilds as an efficient mechanism to foster cooperation between merchants and rulers, building on the complementarity between merchant guilds’ ability to enforce monopoly over trade and their social capital. Unlike existing models, we focus on local merchant guilds, rather than alien guilds, accounting for the main observed features of their behavior, internal organization and relationship with rulers. Our model delivers novel predictions about the emergence, variation, functioning, and eventual decline of this highly successful historical form of network. Our theory reconciles previous explanations and the large body of historical evidence on medieval merchant guilds. In doing so, we also shed novel light on the role of the guilds’ social capital, and its importance for taxation, welfare, and the development of towns and their government in medieval Europe.

Keywords

Merchant guild; Social capital; collusion; Political economy; Trade; Taxation;

JEL codes

  • L20: General
  • L43: Legal Monopolies and Regulation or Deregulation
  • N7: Transport, Trade, Energy, Technology, and Other Services
  • N8: Micro-Business History

Replaces

Roberta Dessi, and Salvatore Piccolo, Merchant Guilds, Taxation and Social Capital, TSE Working Paper, n. 15-581, May 2015.

Reference

Roberta Dessi, and Salvatore Piccolo, Merchant Guilds, Taxation and Social Capital, European Economic Review, vol. 83, April 2016, pp. 90–110.

Published in

European Economic Review, vol. 83, April 2016, pp. 90–110