Trade, law and order, and political liberties: theory and application to English medieval boroughs
Angelucci, Charles; Meraglia, Simone
Date: 1 June 2015
Working Paper
Publisher
University of Exeter
Abstract
We develop a framework that puts the administration at the core of the relationship between trade and political liberties. A ruler chooses the size of an administration that (i) collects taxes and (ii) provides law and order for a representative merchant to use. To be exploited, large gains from trade require a relatively large ...
We develop a framework that puts the administration at the core of the relationship between trade and political liberties. A ruler chooses the size of an administration that (i) collects taxes and (ii) provides law and order for a representative merchant to use. To be exploited, large gains from trade require a relatively large administration. However, keeping a large administration in check is difficult. When the resulting inefficiencies are significant, the ruler grants control of the administration to the better-informed merchant, even though this facilitates tax evasion. We analyze the case of post-Norman Conquest England (1066-1307) by using evidence on taxation, commerce, and political liberties across boroughs. We use boroughs’ ownership as a proxy for the cost of controlling the administration, and find that rulers with a high cost are more willing to grant boroughs the control of their administration. Also, provided it belongs to a high-cost ruler, a borough’s propensity to receive a grant increases with its commercial importance. Finally, we find that boroughs are willing to pay higher taxes in exchange for liberties.
Economics
Faculty of Environment, Science and Economy
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