Closing the price gap - Von Thünen applied to wheat markets in 18th century Spain

Alexandra Cermeño and Carlos Santiago-Caballero

No 2023-01, CEI Working Paper Series from Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University

Abstract: According to the literature, transaction costs are influenced by several factors, ranging from institutional differences to asymmetric information. However, testing these hypotheses requires rich data not usually available in historical sources. In this study, we use a large-scale census of 1749 to analyze price gaps of wheat across rural municipalities and their local markets in Old Castile. For the first time in the literature, we examine price gaps across 5,163 contiguous municipalities and assess transaction costs with unprecedented detail. By employing canonical variables and testing for spatial autocorrelation, we explore the determinants of transaction costs and contribute to the ongoing debates around the "Little Divergence." Our findings not only shed light on the factors that influence transaction costs but also represent a step forward in operationalizing them. Overall, this study offers new insights into the factors that shape transaction costs and contributes to the literature on the "Little Divergence." Our analysis demonstrates the importance of rich data in testing hypotheses related to transaction costs and highlights the benefits of using historical data to inform contemporary debates in economics.

Keywords: Price gaps; transaction costs; spatial equilibrium model; autocorrelation (search for similar items in EconPapers)
JEL-codes: F15 N73 N93 R41 (search for similar items in EconPapers)
Pages: 103 pages
Date: 2023-04
New Economics Papers: this item is included in nep-agr, nep-geo, nep-his and nep-ure
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https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/79756/wp2023-01.pdf

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Persistent link: https://EconPapers.repec.org/RePEc:hit:hitcei:2023-01

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