Risk, Transaction Costs, and Tax Assignment: Government Finance in the Ottoman Empire

Metin Cosgel () and Thomas Miceli ()

No 2003-04, Working papers from University of Connecticut, Department of Economics

Abstract: Risk and transaction costs often provide competing explanations of institutional outcomes. In this paper we argue that they offer opposing predictions regarding the assignment of fixed and variable taxes in a multi-tiered governmental structure. While the central government can pool regional risks from variable taxes, local governments can measure variable tax bases more accurately. Evidence on tax assignment from the mid-sixteenth century Ottoman Empire supports the transaction cost explanation, suggesting that risk matters less because insurance can be obtained in a variety of ways.

Keywords: Ottoman Empire; public finance; taxation; risk; transaction costs; tax assignment (search for similar items in EconPapers)
JEL-codes: H2 N1 N3 N5 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec, nep-his, nep-pke and nep-pol
Date: 2003-01, Revised 2004-09
Note: We wish to thank the editor of the JOURNAL and two anonymous referees, the participants and discussants at the 2002 Annual Cliometrics Conference in La Crosse, WI; the 2003 Alumni Workshop in Iowa City, IA; and the 2003 Social Science History Association meetings in Baltimore, MD for helpful comments and suggestions. Ali Ozdemir, Sadik Yildirim, and Huseyin Yilmaz provided valuable research assistance.

Published in Journal of Economic History, 2005, 65(3): 806-21.

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Journal Article: Risk, Transaction Costs, and Tax Assignment: Government Finance in the Ottoman Empire (2005)
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Persistent link: http://EconPapers.repec.org/RePEc:uct:uconnp:2003-04

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