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)
Pages: 26 pages
Date: 2003-01, Revised 2004-09
New Economics Papers: this item is included in nep-eec, nep-his, nep-pke and nep-pol
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.
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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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