Why Did Kings Summon Towns to Assemblies? a Theoretical Analysis

Charles Angelucci (Columbia University)
Simone Meraglia (University of Exeter)
Nico Voigtlaender (UCLA)

Abstract : This paper offers a novel theoretical explanation for the emergence of medieval assemblies. A king and two towns interact repeatedly. Each period, a public good project of uncertain quality requires funding. Each town privately observes a binary signal about the public good’s quality. King and towns all agree that the public good should be funded (resp. not funded) when both towns’ signals are positive (resp. negative). When signals are conflicting, the king wishes the project to be funded but the towns do not. The king can coercively extract contributions from the towns, unless it grants them autonomy, in which case contributions to the public good are voluntary. We first show that information aggregation cannot occur unless towns are granted autonomy. In an assembly, autonomous towns exchange information prior to choosing their contributions and play trigger strategies in which the public good receives funding whenever both towns are in favor. Alternatively, the king can approach towns sequentially, asking them to make publicly-observable contributions in the hope of triggering a cascade. Although he receives funding more often under sequential contributions than under an assembly, the king cannot rely on trigger strategies to discipline the first agent to be approached. As a result, sequential contributions are less likely to be feasible. This model sheds light on the evolution of national institutions triggered by towns’ administrative autonomy in 13th century England. In less than a century, English kings went from negotiating with towns sequentially to instead seeking their consent in representative assemblies. This modified the type of wars which received financing.

Proxeny: Institutions, Trade and Growth in the Ancient Economy

Pier Paolo Creanza (Princeton University)

Abstract : Recent works have argued that ancient Mediterranean economies were able to grow intensively. A common explanation is a process of Smithian growth spurred by reductions in transaction costs and increased trade flows. This paper contends that an ancient Greek institution, proxenia or proxeny, was among the innovations that allowed such process in the period 500-1 BCE. Proxeny entailed a Greek city-state declaring an individual from another city to be a ‘public friend’, a status that came with both functions to perform and privileges to enjoy. The paper presents the institution, shows how it could reduce transaction costs between communities and models its mechanisms. Then, proxeny is studied systematically via text and network analyses on data coded from the full body of digitized Greek inscriptions. The analysis shows that: (i) at least half of all attested proxeny relations were likely to be economically motivated; (ii) proxeny captures the vast majority of all privileged economic relationships; (iii) the distribution of influence within the proxeny network maps the concentration of trade and economic interests.

Omnia Juncta in Uno: Foreign Powers, Institutions, and Firms in Shanghai's Concession Era

Claudia Steinwender (MIT Sloan)
Laura Alfaro (Harvard Business School)
Maggie X. Chen (George Washington University)
Junjie Hong (UIBE)
Cathy Ge Bao (UIBE)

Abstract : In this project we investigate the influence of institutions on industrial and firm growth by exploiting the unique historical context in Shanghai, China, during the late 19th and early 20th century. While there is a general consensus in the current literature that institutions are important for economic growth, the empirical assessment of this question has traditionally relied on comparing countries with different institutions to each other and over time. We aim to contribute to our understanding on institutions and economic growth by looking at the growth of firms that are subject to different institutions, but are located within the same city, and therefore share the same geographic amenities. Historical Shanghai provides an intriguing context for studying our research question. First, there is variation in the legal framework in which different firm operate, because a number of foreign nations were granted extraterritorial power, which meant that firms of these nations were tried by consular courts following laws of their own nations, instead of Chinese law. Due to (arguably exogenous) geopolitical reasons, certain countries were added/deleted from the list of nations that enjoyed extraterritorial status. Second, there is variation in local governance and regulation, as the city was divided into geographical segments that shared similar natural advantages but were ruled by distinctively different institutions including most prominently the International Settlement and the French Concession. We compiled a newly digitized dataset on firms in Shanghai between 1872 to 1941, covering firm level characteristics such as their specific location, industry and nationality, as well as outcomes related to key employment, employee nationality, trade, and firm organization. This provides us with a unique context to estimate the economic influence of different legal institutions and local governance on firm growth.

Institutional Change and Representative Government: England, 1660-1832

Kara Dimitruk (University of Zurich, CEPR)
David Schönholzer (IIES)
Guo Xu (UC Berkeley)

Abstract : Institutional change is an important driver of long-run development. Broader representation in government is widely believed to be the central mechanism for this relationship. Using data on two centuries of political representation in England, we ask whether institutional change leads to more representative government over the long-run. We link individual-level data on all English Members of Parliament (MPs) and senior-level bureaucrats with genealogical datasets to document how changes in executive constraints and franchise extensions affected the inclusiveness of the state through selection into office. Despite enormous institutional change in the course of the Glorious Revolution and the Great Reform Acts, aristocrats and elite members of society saw stable representation in parliament and government throughout the period. While the selection effects are muted, there is suggestive evidence for a change in their incentives. These findings point towards state capacity as a main mechanism mediating the effect of institutional change on growth.