The Rise and Fall of the Merchant Guilds: Re-thinking the Comparative Study of Commercial Institutions in Premodern Europe

Although the importance of merchant guilds for the commercial development of Europe is beyond doubt, scholars do not agree about why they emerged, persisted, and ultimately declined between the eleventh and eighteenth centuries. Historical studies usually focus on individual cases and idiosyncratic circumstances that restrict comparisons, whereas economic approaches based on game or contract theory often impose narrow assumptions on their models that tend to neglect two key features of these institutions: In imperfect markets, merchants used more than one institution to solve a given problem, and individual institutions often addressed more than one problem. However, a new methodological approach (maximum likelihood estimation), permits rigorous comparative analysis of the probability that merchants, under a given set of market and political circumstances, will delegate control of their dealings. This model requires only one assumption--that merchants will relinquish such control only when they can expect a positive return. 1 The authors thank Maristella Botticini, Ann Carlos, the late Larry Epstein, Joost Jonker, Francesca Trivellato, and anonymous referees for extensive comments and criticism. They also thank participants of the European History Economics Society conference in Istanbul (2005), the Antwerp workshop on mercantile institutions (2005), the London School of Economics Global Economic History seminar, the Utrecht Global Economic History Network conference (2006), the meeting of the Allied Social Science Associations (2007), the Cliometric Conference (2007), the economic history seminar at the University of British Columbia, the Institutions in Early Modern Europe workshop at California Institute of Technology (2008), and the Interuniversity Center for Social Science Theory and Methodology seminar at Utrecht University. All the usual disclaimers apply.