Trade and information shocks, and market development: Evidence from early modern Europe

Abstract

In this paper, I theorize that trade and information shocks were necessary for developing modern impersonal markets. I develop a dataset on the decline of merchant guilds in Europe and find that merchant guilds declined in the sixteenth century in cities on the Atlantic coast that adopted printing early. These cities were exposed to simultaneous trade and information shocks of Atlantic trade and the Gutenberg printing press in the late fifteenth century, making market opportunities outside of guilds lucrative, triggering market development. These cities also had greater printing of “bourgeois” content in the late sixteenth century.

Keywords: Europe, Printing, Information Technology, Atlantic Trade, Guilds, Markets

JEL Classification: N13, N23, N43, N73, N93, Z13