On the Enforcement of Trade Embargoes by the Merchant Guilds

Nils-Henrik M. von der Fehr and David Harbord

MPRA Paper from University Library of Munich, Germany

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.

Keywords: International trade; institutions; noncooperative games; merchant guilds (search for similar items in EconPapers)
JEL-codes: C72 D02 N43 (search for similar items in EconPapers)
Date: 2018-07-10
New Economics Papers: this item is included in nep-gth and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:88431

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