Emergence of Property Rights Enforcement in Early Trade: A Behavioural Model Without Reputational Effects

37 Pages Posted: 29 Jun 2007

See all articles by Geoffrey M. Hodgson

Geoffrey M. Hodgson

Loughborough University London

Thorbjorn Knudsen

University of Southern Denmark - Department of Marketing & Management - Strategic Organization Design Unit (SOD)

Date Written: June 2007

Abstract

The present article develops a behavioural explanation for the emergence of high levels of property rights enforcement in Europe in the Middle Ages (11th to 13th centuries). The merchant guilds have a central role in our explanation. We develop an agent-based model that allows a number of important but previously unexplored issues to be considered (such as the joint importance of price variation, guild stability and the effect of uncoordinated embargo pressures among multiple guilds). We show that almost perfect levels of property rights enforcement can emerge solely as a result of multiple guilds' uncoordinated embargo pressures and medium to high levels of price variation. In fact, both conditions were fulfilled in the Middle Ages. In our model, no reputation mechanisms are required; our results solely depend on behavioural adjustment. Our main result is that high levels of property rights enforcement can emerge instead as a result of guilds' embargo pressures and medium to high levels of price variation. This explanation of the emergence of property rights enforcement complements the mechanisms emphasized in previous research.

Keywords: agent-based model, institutions, guilds, property rights, property rights enforcement

JEL Classification: P14, P48, O17, D23

Suggested Citation

Hodgson, Geoffrey M. and Knudsen, Thorbjorn, Emergence of Property Rights Enforcement in Early Trade: A Behavioural Model Without Reputational Effects (June 2007). Available at SSRN: https://ssrn.com/abstract=997251 or http://dx.doi.org/10.2139/ssrn.997251

Geoffrey M. Hodgson

Loughborough University London ( email )

Institute for International Management
Stratford, London, E20 3BS
United Kingdom

HOME PAGE: http://www.geoffreymhodgson.uk

Thorbjorn Knudsen (Contact Author)

University of Southern Denmark - Department of Marketing & Management - Strategic Organization Design Unit (SOD) ( email )

Faculty of Social Sciences
Campusvej 55
DK-5230 Odense
Denmark

HOME PAGE: http://www.sdu.dk/sod

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