Cost Accounting in Early Regulated Markets: The Case of the Royal Soap Factory of Seville (1525-1692)

Abstract

Regulated markets and state-owned monopolies characterized the economies of many Southern European territories around the end of the Middle Ages and during the Renaissance. Although this economic form was of considerable importance in implementing public policy at the time, investigation into the functioning of cost accounting in such contexts has been consistently neglected in accounting research. In this paper, we examine the role of cost systems in early regulated markets by focusing on the case of the soap production and distribution monopoly in the City of Seville, Spain. In 1423, the King of Castille granted the soap monopoly to the Duke of Alcalá as a reward for his war achievements, but pricing decisions rested in the hands of the local government. Disputes between the Duke of Alc alá and the local government (the parties) about the fair price of a pound of soap were negotiated after the development of tests that replicated the soap production process and determined its cost through complex calculations.

Keywords: Institutional Sociology, Regulated Markets, Early Cost Accounting, Spain