Banking on the King: The Evolution of the Royal Revenue Farms in France
Journal of Economic History, Vol. 66, No. 4, December 2006
Posted: 7 Jan 2008
The writing and allocation of French tax farm contracts changed dramatically after the Fronde (1648-1653): they were gradually transformed from small, competitively auctioned, units into a large cartel known as the Company of General Farms. Surprisingly, the crown's revenues increased. I present a transaction cost argument to explain the behavior of tax farm lease prices as tax farming changed during the seventeenth century. Cartelization of tax farms lowered costs faced by the crown. The tax farm system's evolution offers insights into how organizations evolve to protect their property rights in the absence of well functioning representative institutions.
Keywords: Economic History, France, New Institutional Economics
JEL Classification: N23, D72
Suggested Citation: Suggested Citation